India, US move to finalise BTA, set to be signed after documentation concludes

After months of trade tensions,
India and the US are moving towards formalising a Bilateral Trade Agreement (BTA), with both sides likely to advance documentation this week. The development follows an understanding between US President Donald Trump and
Prime Minister Narendra Modi to lower reciprocal tariffs, setting the stage for the agreement to be signed as part of efforts to ease longstanding trade frictions between the two largest democracies.

Under the agreement, the tariff on
Indian goods has been reduced from 50 per cent to 18 per cent. Washington has also withdrawn the extra penalty that had been linked to India’s purchase of Russian crude oil, leaving only the revised reciprocal tariff in place. The deal includes the rollback of an additional 25 per cent tariff that Trump had imposed on India over its purchases of Russian oil.

PM Modi welcomes decision

Shortly after Trump announced that the US and India had agreed to a bilateral trade deal to lower reciprocal tariffs, Prime Minister Narendra Modi welcomed the reduction of tariffs to 18 per cent on Made in India products.

In a post on X, PM Modi thanked Trump for the decision, describing it as a boost for bilateral ties. “Delighted that Made in India products will now have a reduced tariff of 18%. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement,” he said.

PM Modi said cooperation between India and the United States, as the world’s largest democracies and major economies, would bring broad benefits.

India gains an edge 

With the new tariff structure, India now has lower duty rates compared with several regional competitors. Countries such as Indonesia, Bangladesh and Vietnam face higher tariff rates, and India’s rate is significantly lower than those for China and Pakistan.

The
tariff deal has reduced uncertainty for industry, with the cut to an 18 per cent duty expected to help Indian exporters strengthen their position in the US market. The announcement came as garment, leather and footwear manufacturers, having just shipped containers for the summer season, were concerned about orders for the next cycle.

Smaller firms had nearly stopped shipments in recent months, while larger companies continued by offering steep discounts, with US buyers also absorbing part of the pressure. With the deal in place, Indian goods are seen as more competitive, and products will face an 18 per cent additional tariff over the MFN or product-specific rate.