New Delhi: A day before reciprocal tariffs from the US take effect, India has agreed to the Terms of Reference (ToR) for a Bilateral Trade Agreement (BTA) with the United States. The move follows intervention from the Prime Minister’s Office (PMO), signaling a strong push from the highest levels of government to expedite negotiations.
The ToR, which serves as the framework for trade talks, had been pending until last weekend when US negotiators wrapped up their four-day discussions in India. With both sides now ready to move forward, India is expected to lower tariffs on American goods in exchange for concessions from the US.
US President Donald Trump confirmed on Tuesday that India was willing to reduce tariffs, hinting at a potential breakthrough in trade relations. “I heard that India is going to be dropping its tariffs substantially. A lot of countries are going to drop their tariffs,” he said during a White House briefing.
However, the United States Trade Representative (USTR) has raised multiple concerns about India’s trade policies. In its latest ‘Foreign Trade Barriers’ report, the US flagged issues ranging from internet shutdowns and restrictions on agricultural imports to India’s approach to genetically modified (GM) foods.
Experts caution that India must carefully evaluate these demands. Ajay Srivastava, head of the think tank Global Trade Research Initiative (GTRI), warned that certain US-proposed changes could have long-term consequences for India’s farmers, food safety regulations, and digital policies. “India is open to global trade but must ensure that reforms align with national priorities, development goals, and cultural values,” he said.
US Raises Concerns Over Indian Trade Barriers
The USTR report criticized India’s restrictions on dairy imports, specifically regulations that require dairy products to come from animals that have not consumed feed containing blood meal. The report also highlighted India’s price caps on medical devices such as coronary stents and knee implants, arguing that they do not account for inflation or innovation costs.
Agricultural policies remain a contentious issue, with the US accusing India of distorting global markets through its support programs. The report further criticized India’s restrictions on imports of pulses and boric acid, as well as its slow and unpredictable approval process for genetically modified products.
Digital trade barriers have also drawn US scrutiny, particularly India’s data localization requirements, which mandate that all electronic payment data be stored on servers within the country. The US argues that such restrictions limit the ability of global firms to detect fraud and ensure cybersecurity.
The report also placed India on the ‘Priority Watch List’ due to concerns over intellectual property (IP) protections, including delays in patent approvals and weak enforcement against copyright piracy.
One of the most significant hurdles in the ongoing trade talks is India’s high applied tariffs on various goods, including vegetable oils, apples, motorcycles, coffee, and alcoholic beverages. The US claims that India’s ability to adjust tariffs unpredictably creates uncertainty for American businesses.
Despite these concerns, both countries appear committed to finalizing the trade deal. With the ToR now in place, formal negotiations are expected to begin soon, potentially reshaping the trade dynamics between the two nations.