The terms of reference for the first phase of a bilateral trade deal between the United States and India have been finalized.
In February, the two countries had already decided to work together on the initial phase of the trade agreement, with the goal of completing it by the end of this year. By 2030, the overall objective is to increase bilateral trade to $500 billion. The action was taken in the midst of current trade tensions between the two nations, namely after the US imposed reciprocal tariffs of 26% on Indian exports earlier this month. However, a 90-day halt to tariff increases for major trading nations, including India, has been ordered by US President Donald Trump.
In response, India has changed its tariff system in recent weeks, lowering import taxes on about 8,500 industrial goods, including well-known American goods like Harley-Davidson motorcycles and bourbon whiskey.
As US businesses look to diversify away from China, the bilateral trade deal is a component of “Mission 500” an ambitious drive to more than double existing trade levels and establish India as a crucial partner in global supply chains. India is willing to contemplate zero-duty imports from the US in a few industries under its Production-Linked Incentive (PLI) schemes, and the arrangement is anticipated to include a wide variety of industries, including manufacturing, energy, vital minerals, and technology.
India lowers import taxes as the US-China trade battle intensifies. The US-China trade dispute intensified as a result of this action. After being increased to 54%, tariffs on Chinese imports then skyrocketed to 145%. China responded by enacting more export restrictions, especially on important rare earths, and increasing taxes on US goods to 125%. India has taken action to reduce tensions by lowering tariffs on thousands of goods and indicating that it is willing to work with Washington on trade.