JD Vance, PM Modi announce Terms of Reference for a 'mutually beneficial' bilateral trade agreement

PM Modi, while extending welcome to US V-P JD Vance during his India visit, reviewed trade talks, and said both nations will be setting a 'defining partnership' for the future.

US Vice President JD Vance and Prime Minister Modi on April 22 announced the Terms of Reference for a bilateral trade agreement, currently being negotiated between both the nations.

The terms of reference is being seen as a crucial step forward, establishing a 'roadmap for mutually beneficial, multi-sector Bilateral Trade Agreement negotiations', The Office of the US Trade Representative (USTR) said in a statement. The USTR reiterated America's objective of reducing trade barriers and increasing market access for long term benefits.

"Goals for the United States include increasing market access, reducing tariff and non-tariff barriers, and negotiating a robust set of additional commitments to ensure long-term benefits," the statement said.

PM Modi, while extending welcome to US V-P JD Vance during his India visit, reviewed trade talks, and said both nations will be setting a 'defining partnership' for the future. "We reviewed the fast-paced progress following my visit to the US and meeting with President Trump. We are committed to mutually beneficial cooperation, including in trade, technology, defence, energy and people-to-people exchanges. India-US Comprehensive Global Strategic Partnership will be a defining partnership of the 21st Century for a better future of our people and the world," the Prime Minister said.

US Trade Representative Jamieson Greer welcomed the announcement of the Terms of Reference by Vice President Vance and Prime Minister Modi, which will lay down 'a roadmap for the negotiations' on reciprocal trade. USTR Greer said he hoped the TOR will address the issue of reciprocity in trade relations with India.

“There is a serious lack of reciprocity in the trade relationship with India. These ongoing talks will help achieve balance and reciprocity by opening new markets for American goods and addressing unfair practices that harm American workers. India’s constructive engagement so far has been welcomed and I look forward to creating new opportunities for workers, farmers, and entrepreneurs in both countries,” Jamieson Greer said.

The TOR announcement with India is a 'critical step forward' in negotiations with India, said USTR, as it aims to achieve reciprocal trade with 'one of our most strategic partners', the statement added.

"The goals of this initiative are to drive transformative change across key pillars of cooperation and commit to a results-driven agenda with initial outcomes this year to demonstrate the level of trust for a mutually beneficial partnership," the USTR statement said.

Read More: India eyes tariff relief on key goods in return for ramping up US defence, energy buys

The United States has been mentioning 'significant trade barriers' with India in the past, and noted that the US ran a $45.7 billion goods trade deficit with India in 2024, which is 5% higher over 2023. India has been offering tariff concessions to America in recent past, and during PM Modi's visit to the US in February, a number of tariff reductions were implemented.

The USTR statement said it acknowledged India's tariff reductions and the willingness to further reduce levies on American goods. "The United States welcomed the tariff reductions India implemented during the Prime Minister’s meeting with President Trump in February and its willingness to further reduce tariffs on US products as part of the BTA," USTR said.

Read More: Mutual tariff cuts may dominate India-US trade deal talks this week

The US President has in the past mentioned India's tariff rates are too high. The Trump administration has also pointed at non-tariff barriers as a hinderance to US exports to India. "In addition to tariffs, technical barriers to trade, regulatory barriers, and restrictions on access to the market in the services, industrial, and agricultural sectors also reduce US exports to India," USTR said.

While President Trump on April 9 paused country-specific tariffs on all nations, barring China, including an additional 16 percent reciprocal levy on India, the baseline tariff of 10 percent and certain sectoral duties have started to spell trouble for Indian exporters.

During her US visit, FM Sitharaman reiterated that both nations are likely to conclude negotiations for the first tranche of the proposed bilateral trade agreement (BTA) by autumn of 2025. The BTA is part of a new goal - Mission 500 - aiming to more than double bilateral trade between the two countries to $500 billion by 2030.

In FY25, the US again emerged as India’s top export destination, with an 11.6 percent growth in shipments at $86.51 billion. America was India’s fourth-largest import source nation at $45.33 billion, up 7.4 percent from the previous year.