India in 'regular contact' with US on trade deal, says Commerce Secretary Rajesh Agarwal
India's Commerce Secretary stated that India and the United States remain in "regular contact" on finalizing a bilateral trade agreement (BTA)
Both sides reaffirmed commitment to the contours of the framework agreed in February 2026, which set out the first phase of the proposed BTA
The reaffirmation comes amid new uncertainty from a US Senate bill proposing steep tariffs on countries importing large volumes of Russian oil, which could affect India
Indian exports to the US separately continue to face an additional duty arising from a US Section 301 investigation into forced-labour compliance standards
Bilateral Trade Agreement (BTA) vs FTA vs CEPA
A Bilateral Trade Agreement (BTA) is a negotiated arrangement between two countries to reduce tariff and non-tariff barriers on goods and, in some cases, services and investment. It differs from a full Free Trade Agreement (FTA) in scope and depth, and from a Comprehensive Economic Partnership Agreement (CEPA), which typically covers trade in goods, services, investment, and IP in a single integrated framework. The India-US arrangement being negotiated is structured in phases, with the February 2026 framework marking the completion of the first phase's contours.
Key Details
- India-US BTA: framework for first phase finalized February 2026; negotiations for a comprehensive deal remain ongoing
- Comparable precedent: India-UAE Comprehensive Economic Partnership Agreement (CEPA), signed 2022, in force from May 2022 — India's first CEPA with a Gulf nation, covering goods, services, and government procurement
- India does not currently have a comprehensive FTA with the US; trade has historically been governed by WTO Most Favoured Nation (MFN) terms and limited sector-specific understandings
The February 2026 framework represents a phased, partial trade agreement rather than a comprehensive FTA/CEPA, meaning further rounds of negotiation are required even as both sides publicly reaffirm commitment to it.
Section 301 of the US Trade Act, 1974
Section 301 empowers the US Trade Representative (USTR) to investigate and act against foreign trade practices considered "unreasonable" or discriminatory to US commerce, including through unilateral tariff action. It has historically been used against practices such as intellectual property violations and, more recently, against countries found not to adequately enforce prohibitions on goods made with forced labour.
Key Details
- USTR initiated forced-labour Section 301 investigations covering 60 trading economies in 2026
- Tariffs of 10% to 12.5% were proposed and took effect from July 24, 2026, on the investigated economies, layered on top of other applicable duties
- Unlike WTO-consistent trade remedies (anti-dumping, countervailing duties), Section 301 action is a unilateral US tool not requiring multilateral dispute settlement clearance
India's exports to the US already carry an additional 10% duty under this Section 301 forced-labour action, which is a separate track from the BTA negotiations and the proposed Russia-oil sanctions tariffs, illustrating how multiple US tariff mechanisms can stack simultaneously on the same trading partner.
India's Trade Diversification Strategy Amid Tariff Uncertainty
India has pursued a strategy of diversifying trade partnerships through CEPAs and FTAs (UAE 2022, Australia ECTA 2022, EFTA TEPA 2024) partly to hedge against uncertainty in any single bilateral relationship, including with the US. Trade policy analysts frame such tariff disputes with the US within the larger context of India balancing WTO commitments, regional trade pacts, and strategic autonomy in energy sourcing.
Key Details
- India-Australia Economic Cooperation and Trade Agreement (ECTA): signed 2022, in force December 2022
- India-EFTA Trade and Economic Partnership Agreement (TEPA): signed March 2024, with EFTA states committing USD 100 billion investment over 15 years
- India's average applied MFN tariff remains relatively higher than many trading partners, a recurring point of friction in US trade talks
Continued "regular contact" with the US on the BTA reflects India's preference for negotiated settlement over unilateral tariff escalation, consistent with its broader pattern of using structured trade agreements rather than ad hoc responses.
- India-US BTA first-phase framework finalized: February 2026
- Additional Section 301 forced-labour duty on Indian exports to the US: 10%
- Section 301 forced-labour tariffs (60 economies) took effect: July 24, 2026, at 10-12.5%
- India-UAE CEPA in force since: May 2022
- India-Australia ECTA in force since: December 2022
- India-EFTA TEPA signed: March 2024