Published: 2025-10-30T06:05:59.000Z

Breakthrough in Sight: India and US Move Towards Bilateral Trade Agreement

20

The India–US trade deal now seems within reach after months of deadlock, with both sides signalling convergence on major issues. For Indian exporters, particularly in textiles, marine products, and engineering goods, the removal of US tariffs would provide a timely boost amid global demand uncertainty. But implementation risks remain, especially if political timelines or fresh geopolitical shocks disrupt the final phase.

A long-awaited trade agreement between India and the US appears imminent, with US President Donald Trump confirming that a deal is “around the corner.” Speaking in South Korea, Trump stated that he's doing a trade deal with India and has the highest respect and love for Prime Minister Modi. This marks his first public affirmation of a potential thaw in economic ties after months of escalating tensions.

Negotiations for a Bilateral Trade Agreement (BTA) between the two countries have advanced significantly over the past year. Five rounds of talks have already concluded, with legal drafting of the agreement underway. A sixth round—previously delayed amid tariff escalations—could resume shortly, now that political signalling from Washington indicates momentum towards convergence. A senior Indian official recently confirmed that both sides are “very close to a trade agreement,” with convergence reached on most key issues. According to the official, non-tariff barriers remain the focus, implying that the earlier sticking point of tariff concessions—particularly on agricultural and dairy access—has been addressed.

India has consistently resisted opening its farm and dairy sectors to US competition, while Washington has pushed for greater market access and reciprocal tariff concessions. Tensions spiked in August, when the US imposed reciprocal 25% tariffs on Indian goods, followed by additional penalties linked to India’s purchase of Russian oil. These moves stalled talks and led to the cancellation of the sixth negotiation round. However, recent US sanctions on Russian energy giants Rosneft and Lukoil appear to have triggered a recalibration in India’s energy sourcing, creating room for diplomacy. Signs of India reducing Russian oil imports have helped rebuild goodwill with Washington and revive the trade deal trajectory.

The announcement sent ripples through Indian equity markets, lifting shares of textile and marine exporters—two of the sectors most affected by earlier US tariffs. India is now seeking the removal of these additional duties and a rollback of certain import tariffs to restore competitiveness. If finalised, the India–US trade agreement would mark the most significant bilateral economic breakthrough since the termination of India’s GSP benefits in 2019. For now, both sides appear aligned in principle—what remains is sealing the deal before political cycles complicate the final stretch.

4Cast Ltd. and all of its affiliates (Continuum Economics) do not conduct “investment research” as defined in the FCA Conduct of Business Sourcebook (COBS) section 12 nor do they provide “advice about securities” as defined in the Regulation of Investment Advisors by the U.S. SEC. Continuum Economics is not regulated by the SEC or by the FCA or by any other regulatory body. This research report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Nonetheless, Continuum Economics has an internal policy that prohibits “front-running” and that is designed to minimize the risk of receiving or misusing confidential or potentially material non-public information. The views and conclusions expressed here may be changed without notice. Continuum Economics, its partners and employees make no representation about the completeness or accuracy of the data, calculations, information or opinions contained in this report. This report may not be copied, redistributed or reproduced in part or whole without Continuum Economics’s express permission. Information contained in this report or relied upon in its construction may previously have been disclosed under a consulting agreement with one or more clients. The prices of securities referred to in the report may rise or fall and past performance and forecasts should not be treated as a reliable indicator of future performance or results. This report is not directed to you if Continuum Economics is barred from doing so in your jurisdiction. Nor is it an offer or solicitation to buy or sell securities or to enter into any investment transaction or use any investment service.
Analyst Declaration
I,Sanya Suri, the Senior Asia Economist declare that the views expressed herein are mine and are clear, fair and not misleading at the time of publication. They have not been influenced by any relationship, either a personal relationship of mine or a relationship of the firm, to any entity described or referred to herein nor to any client of Continuum Economics nor has any inducement been received in relation to those views. I further declare that in the preparation and publication of this report I have at all times followed all relevant Continuum Economics compliance protocols including those reasonably seeking to prevent the receipt or misuse of material non-public information.