India first to conclude trade deal framework with Trump 2.0

India and the US have finalised the Terms of Reference for a comprehensive trade deal, covering goods, digital trade, and IP rights. Talks will proceed under the COMPACT programme. Amid new US tariffs and a US$ 45.7 billion trade deficit, India remains a key priority for a tailored agreement.

India and the United States have taken a significant step toward a comprehensive trade agreement by finalising the Terms of Reference (TOR) for upcoming negotiations. This development follows US Vice President JD Vance’s visit to India, where he met Prime Minister Narendra Modi. 

The two-phase Bilateral Trade Agreement (BTA) is expected to be a comprehensive package, encompassing goods, digital trade, the movement of professionals, technical trade barriers, and intellectual property rights. Indian trade negotiators are set to begin a three-day visit to Washington on Wednesday to engage in the discussions.

Ambassador Jamieson Greer, the US Trade Representative, confirmed the development. 

In a statement released by the Office of the United States Trade Representative, he said, “I am pleased to confirm that USTR and India’s Ministry of Commerce and Industry have finalised the Terms of Reference to lay down a roadmap for the negotiations on reciprocal trade.” 

The TOR, concluded earlier this year after a meeting between President Trump and PM Modi, outlines areas of cooperation such as market access, regulatory alignment, and supply-chain integration. It will guide talks under the broader Catalysing Opportunities for Military Partnership, Accelerated Commerce & Technology (COMPACT) programme launched in February 2025. COMPACT aims to deepen both countries’ defence ties and economic collaboration.

However, the backdrop to the negotiations is tense. The US recently imposed a 26% tariff on Indian imports, part of a wider overhaul of its trade strategy under President Trump. This includes a new 10% baseline tariff on all US imports. Although there were early reports of a 27% tariff on Indian goods, the USTR clarified it would be 26%, with exemptions for key sectors such as pharmaceuticals, semiconductors, and energy commodities like oil, coal, and LNG. The new tariffs will take full effect in July unless an agreement is reached.

The US$45.7 billion US trade deficit with India in 2024—a 5.1% increase from 2023—is cited as a major driver behind the tougher stance. Officials assert that India remains a priority for a tailored agreement, even as similar negotiations are ongoing with Japan, South Korea, and Vietnam. However, none of those talks have yet produced a formal agreement.