India–US Trade Deal in Final Stages, 50% Tariff on Indian Exports Could Be Lifted

India and the United States are closing in on a long-pending bilateral trade agreement, with negotiators now focused on resolving a handful of outstanding issues after weeks of intensive discussions. Officials on both sides say there is broad convergence on the core framework, though differences remain on sensitive matters such as tariff levels and the sequencing of commitments.

According to people familiar with the negotiations, recent rounds of talks have sharply reduced the number of unresolved items. Technical teams from both countries continue to engage, aiming to bridge the remaining gaps. Once an understanding is reached, the proposed agreement will require clearance from the US Trade Representative and India’s Commerce Ministry before being placed before Prime Minister Narendra Modi and US President Donald Trump for final approval.

One of the earliest expected outcomes of the deal is the removal of the 50 per cent tariff imposed on Indian exports to the US since last summer. The levy has weighed heavily on sectors such as textiles and apparel, though officials pointed out that overall bilateral trade has still expanded at a high single-digit rate during this period.

A closer look at the data, however, reveals uneven trends. Textile and apparel exports have faced sustained pressure, even as certain fabric categories posted marginal gains. Pharmaceutical exports reflected a similar pattern, with mixed performance across segments, though overall shipment volumes continued to rise.

US legal developments also form part of the broader backdrop to the negotiations. Officials said a potential Supreme Court ruling on the scope of tariff-setting authority is not directly influencing the talks, but remains a risk factor. An adverse ruling could compel Washington to rely on alternative legal provisions that impose stricter limits on tariff levels and timelines, potentially reshaping the political narrative around trade enforcement.

Despite these uncertainties, support for stronger India-US economic ties remains firm on Capitol Hill, with lawmakers from both parties expressing backing for deeper commercial engagement.

Separately, immigration-related policy changes in the US have affected business sentiment. Increased fees for certain skilled-worker visas have raised concerns among companies and professionals. While these issues are not formally part of the trade negotiations, officials acknowledged that they influence perceptions of the broader bilateral relationship.

Sources added that Prime Minister Modi and President Trump have held multiple phone conversations over the past few months, during which the broad contours of the trade deal were discussed. Speaking at the World Economic Forum in Davos, Trump publicly voiced optimism about concluding what he described as a “great” trade agreement between the two countries.