India, US closer to trade deal? Official sources say ‘very significant' progress in negotiations

India and the United States have made “very significant” progress in their negotiations for a trade deal, as the nations maintain steady momentum in the bilateral trade agreement (BTA) talks for a potential trade deal amid the final stages of a free trade deal with the European Union, reported the news agency PTI, citing an official aware of the development.

The official also told the news agency that the mega trade deal with the European Union should not be seen as a response to offset trade relations with the United States, as the Western nation is crucial for the Indian exporters.

The official source also told the agency that very significant progress has been made in the negotiations for the proposed India-US trade deal, and both sides are “very close” to seeing the outcome of the talks.

They also said that both sides remain in touch and even during the final stages of negotiating the EU trade pact, Indian trade negotiators were in contact with their US counterparts, according to the agency report.

“So that work is continuing. We are hopeful of a positive outcome,” said a source, cited in the agency report.

Meeting for critical minerals

According to the agency report, External Affairs Minister S Jaishankar is set to travel to the United States next week to attend a meeting on critical minerals. During his trip, Jaishankar will meet senior Trump administration officials, including the US Secretary of State Marco Rubio.

The officials also ruled out India reviewing its decision not to join the Regional Comprehensive Economic Partnership (RCEP) that is largely dominated by China.

Since 2025, India and the United States have held multiple rounds of trade negotiations for the proposed bilateral trade agreement. However, the trade talks witnessed a hurdle after Trump imposed 50% tariffs on Indian goods imported to the Western nation.

Tariffs aside, the trade relations between India and the United States came under strain on issues like Trump's claim of ending the India-Pakistan conflict in May 2025, and America's new immigration policy.

Importance of US market for Indian exporters

The US market is a very important market for all Indian exporters, and therefore, the traders keep eyeing the long-awaited trade deal, the official told the news agency.

“Our export to the EU is worth USD 76 billion as compared to USD 86 billion to the US. So it's an equally important market for us,” one of the sources told the news agency. “India and the EU have finalised the trade deal because it is in the mutual interest and mutual benefit of both sides,” they said.

The sources, citing the current global trade environment, said the MFN-based WTO (World Trade Organisation) oriented system is under stress and trading partners are trying to navigate the challenging environment.

The Most-Favoured-Nation (MFN) principle is a non-discriminatory pillar of the WTO trading system that requires that any trade advantage granted to one country must be extended to member nations of the WTO.

“India would like to see exports grow both in the US and Europe as we don't see one over the other,” the source said.

"We see it should grow in both places because at the end of the day, that will create jobs, that will create more manufacturing," the source added.

The India-EU free trade agreement that will account for almost a quarter of the global GDP will reduce tariffs on 99 per cent of Indian exports to the EU and cut duties on over 97 per cent of the EU's exports to India.

The EU estimated that the deal will cut up to four billion euros in annual tariffs for European exporters.

Indian sectors such as textiles, apparel, leather goods, handicrafts, footwear and marine products are set to gain from the FTA, while Europe is set to benefit in areas of wine, automobiles, chemicals and pharmaceuticals, among others.

Under the provisions of the pact, the EU's wine exports will benefit significantly as the current duties of 150 per cent will see a sharp cut and the new levies will be in the range of 20 per cent to 30 per cent.

(With agency inputs from PTI)