New Delhi: Prime Minister Narendra Modi and U.S. Vice President JD Vance took a significant step towards strengthening economic ties on Monday, announcing the Terms of Reference (TOR) for a bilateral trade agreement (BTA). The move marks a pivotal moment in the ongoing efforts to foster a results-driven, mutually beneficial partnership between India and the United States.
The announcement came after the two leaders met in the national capital, where they discussed various aspects of the potential agreement. U.S. Trade Representative Jamieson Greer confirmed that the TOR, finalised between the U.S. Trade Representative’s office and India’s Ministry of Commerce and Industry, will lay down the roadmap for reciprocal trade negotiations.
Key Goals of the Bilateral Trade Agreement
In a statement, Greer underscored that the talks were designed to address imbalances in the trade relationship between the two countries, particularly the lack of reciprocity in trade. He noted that the BTA would help open new markets for American goods and tackle what he described as “unfair practices” that negatively impact American workers.
The TOR’s goals are to drive transformative change across key sectors of cooperation and to ensure a results-driven agenda with tangible outcomes within the year. Greer emphasised that the agreement aims to establish a level of trust between both nations, paving the way for a mutually beneficial trade relationship.
Remarks from JD Vance
During his four-day visit to India, Vice President JD Vance met with Prime Minister Modi on Monday evening. Vance, who referred to Modi as a “great leader,” expressed his enthusiasm for strengthening the U.S.-India partnership under President Donald Trump’s leadership. On social media, Vance stated:
“It was an honour to see Prime Minister Modi this evening. He’s a great leader, and he was incredibly kind to my family. I look forward to working under President Trump’s leadership to strengthen our friendship and cooperation with the people of India.”
Progress Towards Bilateral Trade Agreement
This announcement follows Prime Minister Modi’s February visit to the United States, where he and President Trump discussed the Bilateral Trade Agreement that aims to be finalised by fall 2025. The BTA is part of a broader strategy to enhance U.S.-India cooperation across military, trade, and technology sectors.
Additionally, U.S. tariffs on India have been a point of contention. On April 2, President Trump introduced sweeping reciprocal tariffs, including a 26% tariff on Indian goods. However, these tariffs were placed on hold for 90 days for most countries, except for China, which is facing a 145% tariff.
Exemptions and Future Developments
Following the tariff pause, Trump announced that a 10% tariff would apply to most foreign imports, though pharmaceuticals, semiconductors, and energy products such as oil, gas, coal, and LNG would be exempt.
As both nations continue to advance their trade negotiations, the finalised Bilateral Trade Agreement holds the potential to reshape economic dynamics between India and the U.S., enhancing trade, boosting cooperation, and aligning their interests on the global stage.
