India and the United States have finalised the first tranche of their proposed bilateral trade agreement, with legal drafting now under way, Commerce and Industry Minister Piyush Goyal said on October 15. The development marks an important step in negotiations between the two countries, although the agreement is not yet ready to be implemented.
Goyal said the government hoped to complete the remaining work soon. However, India would operationalise the deal only after securing a comparable or competitive advantage over other countries competing for access to the US market.
The minister’s statement signals that India is looking beyond the completion of negotiations to the actual benefits the agreement could deliver to Indian businesses. The government wants Indian exporters to receive favourable treatment compared with competitors in countries such as Vietnam, Bangladesh and Indonesia.
The first tranche forms part of a wider effort to strengthen India-US trade relations and improve market access for businesses in both countries. The proposed bilateral trade agreement is expected to address tariffs and other trade barriers, creating a more predictable environment for exporters and importers.
However, the details of the finalised tranche have not yet been made public. The legal drafting process will help translate the negotiated terms into formal provisions, while both sides work through the remaining issues before signing and implementation.
Tariffs remain a key concern
Tariffs have been one of the biggest challenges in the India-US trade negotiations. The framework announced earlier in 2026 envisaged a reduction in US tariffs on Indian goods from 50% to 18%. The change was expected to ease pressure on Indian exporters and improve their competitiveness in the American market.
Since then, changes in the US tariff framework and continuing uncertainty over trade policy have complicated the process. India wants clarity on the duties its products will face before the agreement is put into effect.
The government is also concerned about whether Indian goods will receive treatment comparable to products exported by competing economies. Even if tariffs are reduced, Indian exporters could remain at a disadvantage if rival countries receive more favourable terms.
This is particularly important for sectors that depend on exports to the United States. Textiles, garments, engineering goods, pharmaceuticals, chemicals and other manufactured products could benefit from more predictable market access, depending on the final terms.
For Indian companies, tariff stability can influence decisions about production, pricing, investment and hiring. A clearer trade framework could help businesses plan shipments and negotiate contracts with greater confidence.
Trade figures underline the importance of the US market
The United States is one of India’s most important trading partners. Strong commercial ties support a wide range of industries, from manufacturing and information technology services to pharmaceuticals and engineering.
India’s exports to the US rose to $42.79 billion between April and August 2026, compared with $40.39 billion during the same period a year earlier, according to figures cited in recent reporting. India also recorded a trade surplus of around $34 billion in the 2025-26 financial year.
These figures underline why the negotiations matter to Indian businesses. The US market offers a large customer base, but access depends partly on tariffs, regulatory requirements and the ability of Indian products to compete on price and quality.
A trade agreement could also encourage investment by giving companies greater clarity about the rules governing cross-border business. Indian manufacturers may be better placed to expand capacity if they have greater certainty about access to overseas markets.
The benefits, however, will depend on the final provisions. Tariff reductions alone may not be sufficient if businesses continue to face other barriers or if competing exporters enjoy more favourable terms.
Negotiations continue amid changing trade rules
The India-US trade pact has been shaped by changing tariff policies and wider economic considerations. Both countries are seeking to protect domestic interests while expanding commercial opportunities.
The legal drafting stage is an important part of this process, but it is not the same as a signed and operational agreement. The negotiated provisions must be finalised, the remaining concerns addressed and the necessary steps completed before businesses can rely on the new terms.
US Ambassador to India Sergio Gor has indicated that the two sides have made substantial progress and are close to an agreement. Commerce Secretary Rajesh Agrawal has also said that the negotiations are moving in the right direction.
Yet the government’s emphasis on competitive advantage shows that the final decision will depend on more than the speed of negotiations. India wants to ensure that its exporters are not placed at a disadvantage against countries selling similar products to American buyers.
For businesses, the next important development will be the publication of details explaining which products receive preferential treatment, how tariffs will change and when the provisions will take effect.
The agreement could help deepen economic ties between India and the United States, but its value will ultimately be judged by the opportunities it creates for exporters and investors. Completing the legal process is the next step; securing meaningful market access will be the real test.
