Moving decisively towards finalizing trade deal with India, says US Ambassador Gor

The US Ambassador to India stated that the US is moving "decisively" toward finalising a bilateral trade agreement with India, with active high-level negotia...

What Happened

The US Ambassador to India stated that the US is moving "decisively" toward finalising a bilateral trade agreement with India, with active high-level negotiations underway.
Negotiations focus on three primary areas: tariff levels, market access (goods and services), and digital trade rules.
A US tariff deadline at the end of July 2026 (expiry of the Section 122 surcharge on July 24) is providing the key urgency for finalising at least the first phase of the agreement.
Ministerial-level talks are underway to resolve open ends and give the February 7, 2026 framework agreement a durable legal and commercial foundation.
Both sides aim to execute the phase-one Bilateral Trade Agreement (BTA) by mid-July 2026.

Static Topic Bridges

Digital Trade — Emerging Pillar of Modern Trade Agreements

Digital trade refers to trade enabled by digital technologies — including cross-border e-commerce, digital services, data flows, software licensing, and platform-mediated services. Unlike goods trade, digital trade is not yet governed by a comprehensive multilateral WTO framework. The WTO's Work Programme on Electronic Commerce (1998) has produced a moratorium on customs duties on electronic transmissions since 1998, renewed at successive Ministerial Conferences.

The US-Mexico-Canada Agreement (USMCA, 2020) is the most comprehensive digital trade chapter in a bilateral deal, covering: no customs duties on digital products, prohibition on data localisation mandates, no source code disclosure requirements, and cross-border data flows.
India's approach to digital trade has been cautious: the Digital Personal Data Protection Act, 2023 (DPDPA) allows the government to restrict cross-border data flows to notified countries — a provision the US views as a data localisation risk.
India maintains requirements for local storage of certain financial data (RBI's 2018 directive for payment system operators — data must be stored only in India).
The IT industry, digital services, and e-commerce are sectors where India has significant offensive interest (exports of digital services) but defensive concerns (platform regulation, data sovereignty).

Connection to this news: Digital trade is one of the "open ends" in the India-US BTA negotiations. India's position on data localisation, source code, and platform regulation are the main points of friction with the US's preferred USMCA-style digital chapter.

Market Access in Trade Negotiations — Goods and Services Dimensions

Market access refers to the conditions under which goods and services from one country can enter another's market. For goods, this primarily means tariff levels and non-tariff barriers (licensing, standards). For services, it involves "modes of supply" under GATS — Mode 1 (cross-border), Mode 2 (consumption abroad), Mode 3 (commercial presence), and Mode 4 (movement of natural persons).

Under General Agreement on Trade in Services (GATS), WTO members make market access commitments by sector and mode of supply in their "schedules of commitments."
India's services exports to the US (IT, business process outsourcing, professional services) are primarily via Mode 1 (cross-border) and Mode 4 (movement of natural persons, i.e., H-1B visa-holders).
US market access demands in BTA: India to reduce import licensing restrictions on ICT goods; address barriers for medical devices (price caps, regulatory approvals); reduce agricultural tariffs and SPS barriers on specific products.
India's market access asks from the US include: easier H-1B and L-1 visa access for Indian professionals; recognition of Indian professional qualifications; and stable tariff treatment for Indian IT goods and services.

Connection to this news: The US Ambassador's reference to "market access" as a key negotiating theme reflects both sides' offensive interests — the US wants goods market access in India; India wants services and people movement access in the US.

India's Trade Policy and the Foreign Trade Policy 2023-28

India's trade policy is anchored in the Foreign Trade Policy (FTP), notified under the Foreign Trade (Development and Regulation) Act, 1992. The FTP provides the framework for export promotion, import licensing, duty exemption schemes, and special economic zones. The current FTP (2023-28) marks a shift toward process liberalisation, trust-based trade facilitation, and legal-entity-level export promotion.

FTP 2023-28 (notified April 1, 2023): targets USD 2 trillion in goods and services exports by 2030.
Key instruments under FTP: Advance Authorisation Scheme (duty-free imports for export production), Export Promotion Capital Goods (EPCG) scheme, and Special Economic Zones (SEZs) governed by the SEZ Act, 2005.
The Directorate General of Foreign Trade (DGFT) under the Commerce Ministry administers the FTP and issues Import Export Codes (IECs).
India's tariff policy is distinct from the FTP and is governed by the Customs Tariff Act, 1975 (which sets basic customs duty rates, amended annually through the Finance Bill).

Connection to this news: Any tariff concessions India makes in the BTA phase-one will require amendment of schedules under the Customs Tariff Act, 1975 — typically done through an ordinance or a specific notification. The FTP's export promotion instruments would need to be aligned with any new treaty obligations.

India as a Geoeconomic Pivot — Strategic Context of India-US Trade Deal

India's centrality in major power competition has given its trade negotiations a strategic dimension beyond purely commercial calculus. The US interest in concluding a BTA with India reflects both economic objectives (reducing trade deficit, market access) and geostrategic ones (deepening economic interdependence with a key Indo-Pacific partner, supporting India's positioning as an alternative supply chain hub).

India-US defence and strategic convergence: Major Defence Partner (MDP) status (2016); COMCASA (2018), BECA (2020) foundational agreements signed; iCET (Initiative on Critical and Emerging Technologies, 2023) — covering semiconductors, AI, space, defence.
India's merchandise trade surplus with the US (USD 34.4 billion in 2025-26) is a US concern driving tariff reciprocity demands.
India's "China+1" positioning: global supply chain diversification away from China has increased interest in India for manufacturing in electronics, pharmaceuticals, and textiles — making a stable trade framework commercially important.
Quad grouping (India, US, Australia, Japan) provides the broader strategic framing within which the bilateral trade relationship sits.

Connection to this news: The US Ambassador's characterisation of "decisive" movement reflects strategic urgency — both sides have incentives to deepen economic ties as part of a broader partnership realignment, not just commercial interest.

Key Facts & Data

Section 122 tariff deadline: July 24, 2026 (expiry of 150-day US global surcharge)
Section 122 surcharge rate: 10% on all imports; maximum permissible: 15%; duration cap: 150 days
Phase-one BTA target: Mid-July 2026
India-US goods trade (2024-25): approximately USD 140 billion; US is India's largest export destination
India's trade surplus with US: USD 34.4 billion (2025-26)
India's IT and digital services exports to US: largest component of India's services trade
DPDPA, 2023: allows government to restrict cross-border data flows — key friction point in digital trade chapter
WTO moratorium on e-commerce customs duties: in effect since 1998; renewed at each WTO Ministerial Conference
India's FTP 2023-28 export target: USD 2 trillion by 2030
India-US Major Defence Partner status: designated 2016
iCET launched: January 2023 (Biden-Modi Washington summit)