India-US interim trade deal adds digital trade to BTA framework

India-US interim trade deal adds digital trade to BTA framework

• India and US expand trade talks to include digital commerce rules
• India to cut tariffs on US goods; US to remove tariffs after interim deal
• India plans to buy $500 billion in US goods over five years

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India and the United States have formally brought digital trade within the scope of their proposed bilateral trade agreement (BTA) under the interim trade framework announced on February 7, expanding the remit of negotiations beyond tariffs and goods to include rules governing digital commerce.

In a joint statement released alongside the framework, the two sides said they would address “discriminatory or burdensome practices and other barriers to digital trade.”

"The United States and India commit to address discriminatory or burdensome practices and other barriers to digital trade and to set a clear pathway to achieve robust, ambitious, and mutually beneficial digital trade rules as part of the BTA," the statement read.

The inclusion of digital trade, though limited in detail, marks a notable shift in the structure of the talks, as India has historically avoided binding digital trade commitments in trade agreements. The statement does not outline any immediate changes to domestic digital or data policies, but formally establishes digital trade as a negotiating area in subsequent discussions.

The digital trade provision is part of a broader interim arrangement aimed at recalibrating India-US trade ties while negotiations on a comprehensive BTA continue. As part of the framework, India has agreed to eliminate or reduce tariffs on all US industrial goods and a wide range of agricultural and food products, including dried distillers’ grains, sorghum for animal feed, tree nuts, fruits, soybean oil, wine and spirits.

The United States will continue to apply a reciprocal tariff rate of 18 percent on Indian-origin goods under existing executive orders, but has committed to removing these tariffs on a broad set of products once the interim agreement is concluded. These include generic pharmaceuticals, gems and diamonds, aircraft and aircraft parts, and select manufacturing goods.

The statement also outlines steps to address non-tariff barriers, with India agreeing to ease restrictions affecting US medical devices, simplify import licensing procedures and review the acceptance of US-developed or international standards in identified sectors within six months of the agreement’s entry into force.

In addition, India has indicated plans to purchase $500 billion worth of US goods over the next five years, spanning energy products, aircraft and aircraft parts, precious metals, technology products and coking coal. The two sides also flagged an expansion of trade in technology products, including graphics processing units and data centre-related equipment.

Both countries further agreed to strengthen cooperation on supply chains, export controls, investment reviews and rules of origin to ensure that the benefits of the agreement accrue primarily to India and the United States.

The interim framework is expected to be implemented expeditiously, with negotiations continuing towards finalising a comprehensive bilateral trade agreement.