India and the United States are making steady progress on a Bilateral Trade Agreement (BTA), with tariffs emerging as a central component of the negotiations, according to Dr. Ajay Kumar, Minister (Commerce), at the Embassy of India in Washington DC.

Speaking at the 2025 Convention of the Indian American International Chamber of Commerce (IAICC), on May 2, 2025, at the Ronald Reagan International Trade Center, in Washington DC, Dr. Kumar stated that the ongoing tariff negotiations are “critically linked” to the broader BTA. He noted that both governments are “closely engaged” and aiming to conclude the first phase of the deal by fall 2025.

“We hope that we are going to be having a bilateral trade deal as committed by our two leaders,” Dr. Kumar said during his keynote address.

Addressing the backdrop of global trade tensions due to US imposed tariffs, Dr. Kumar emphasized that India’s tariffs are fully compliant with international norms. “Our tariffs are not illegal; our tariffs are consistent with the WTO commitments. It’s not decided at our level only; it has been arrived after we interact with all WTO members,” he said.

He noted that India’s tariff structure aligns with its developmental goals, and the country has been proactive in concluding free trade agreements with multiple nations. Over the past five years, India has reached out to U.S. counterparts with the goal of establishing a broad-based, comprehensive free trade agreement.

While domestic political dynamics in the U.S. have previously hindered progress, Dr. Kumar expressed optimism. He remarked that both nations are “on a great path at this moment” to negotiate a trade agreement that will encompass tariffs, market access, non-tariff barriers, and additional areas.

According to Dr. Kumar, bilateral trade between India and the U.S. in 2025 has reached $210 billion, including goods and services. Since 2021, India has become the United States’ largest trading partner – an achievement realized despite the absence of a formal trade agreement.

“One of this year’s biggest wins also include the launch of India-US Trust Initiative,” he said. He emphasized that the initiative will foster deeper collaboration among governments, academia, and the private sector in critical technology sectors such as defense, space, AI, semiconductors, quantum computing, biotechnology, and aerospace.

“I understand that US constitutes the largest destination for India’s defense exports. We export to the tune of 34 per cent of our defense exports to the United States,” he added. 

Dr. Kumar underlined India’s readiness to integrate into global supply chains, targeting $500 billion in bilateral trade by 2030, a goal outlined in the February 13th joint statement by Prime Minister Narendra Modi and President Donald Trump.

He highlighted India’s economic trajectory, noting it has now become a $4 trillion economy. “I think we are a very confident economy at this moment where we can actually have much closer international competition,” he said, adding that Indian companies like Tata and Mahindra are leveraging global technologies and competing internationally.

Reflecting on the past decade, he stated that the India-U.S. relationship has “assumed a much greater significance,” not only for the two nations but for global well-being. He credited the Indian diaspora for its pivotal role in strengthening bilateral ties, with both sides cooperating across various sectors.

Citing Prime Minister Modi’s recent U.S. visit, Dr. Kumar said the relationship has deepened in areas such as defense, commerce, and strategic technology, forming what he called the “India-US compact for the 21st century.”

“It has been possible due to mutual trust and broad alignment of values of freedom, rule of law and pluralism between our two countries on the face of increasing economic and geopolitical contestations. The India-US partnership today act as an anchor for the certainty and stability,” he added. 

He also underscored the significance of U.S. Vice President JD Vance’s visit to India, during which his meeting with Prime Minister Modi helped finalize the Terms of Reference for current trade negotiations. “This is a crucial first step towards the multi sectoral BTA, which both PM Modi and President Trump have agreed in February,” Dr. Kumar said.

India’s “business-friendly environment, abundance of talent, youthful population and rapid roll out of world-class infrastructure” make it a compelling destination for global manufacturing, he also noted.

“At the same time, our growing market is also supporting new jobs in the American market,” he added. “I understand that more than $40 billion worth of investments has been made by Indian companies across various states in the United States, creating thousands of high paying jobs.” 

He highlighted recent Indian investments exceeding $10 billion in U.S. states including Texas, Alabama, Kentucky, Arkansas, North Carolina, Minnesota, and Ohio. These, he said, are helping rejuvenate America’s steel, aluminum, advanced materials, and battery manufacturing industries.

Additionally, he said, Indian pharmaceutical companies are expanding operations in the U.S., helping to reduce drug costs and bolster domestic supply chains.

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