India and the United States are preparing to discuss broader trade issues in the second phase of their ongoing trade deal. Both countries are also close to finalising an agreement in the first phase that will address long-pending reciprocal tariff concerns.
US LPG Agreement Will Be Handled Separately
India’s Trade Secretary has clarified that the US LPG agreement will remain separate from the bigger trade deal. This means LPG supply talks will not slow down or influence the wider India–US trade negotiations.
US Removes Tariffs on 200+ Food Items
The United States has removed tariffs on more than 200 food products to ease pressure from rising grocery prices. This move provides relief to exporters around the world, including India.
Indian agricultural products such as:
- Tea
- Coffee
- Spices
- Cashew nuts
were earlier facing tariffs as high as 50%. These items are now expected to see better demand and improved market access in the US.
Indian Exporters May Gain $2.5–3 Billion
According to FIEO, Indian exporters may benefit by $2.5–3 billion due to the new tariff exemptions. This relief comes at a time when overall exports to the US have shown a decline.
India’s Export Trends to the US
Despite tariff relief, Indian exports to the US fell by 12% year-on-year in September 2024, reaching $5.43 billion. Farm exports alone contributed $5.7 billion out of India’s total exports of $87 billion in 2024.
Will India Face Trump’s New Tariffs?
A key uncertainty remains: Will India be exempt from Donald Trump’s proposed 25% reciprocal tariff, or will it face the full 50% rate? The final decision is expected during the upcoming phases of India–US trade negotiations.
Hassett on Trade, Fed Policy, and U.S. Economic Outlook
Kevin Hassett says the U.S. is “very close” to finalising a trade deal with India, adding that all trade agreements so far have received the required exemptions.
He emphasises that the Federal Reserve must now take a fully data-driven approach, noting mixed signals in the job market but an overall positive economic outlook. He also expects a period of “quiet time” in the labour market.
When asked about another reconciliation bill, Hassett said there should “definitely” be one, at least next year.
Conclusion
The India–US trade relationship is entering a crucial stage. While the removal of US tariffs on food items is a major relief for Indian exporters, larger issues such as reciprocal tariffs and second-phase trade topics are still under discussion. The outcome of these talks will play a major role in shaping India’s export growth in 2025 and beyond.
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