India-US Trade Deal: Protecting Sensitive Sectors, and Why India Stayed Out of RCEP
The Union Ministry of Commerce and Industry said the India-US Bilateral Trade Agreement (BTA) will protect all of India's sensitive interests, including those of farmers. The statement was made at the national conference of the Institute for Studies in Industrial Development (ISID) and the Industrial Development Research Association (IDRA) in New Delhi.
The full text of the deal is not yet public. The government said that most discussions are over and the agreement is being "fine-tuned". It added that the deal covers investment and services, not only market access (lower import taxes on goods).
In February 2026, India and the US announced a framework for the first phase of the BTA. Later changes in US tariff (import tax) policy led to more rounds of talks. India is seeking lower US tariffs on its goods than its export rivals, such as Bangladesh, Vietnam and Cambodia, get.
The government also defended India's November 2019 decision to stay out of the Regional Comprehensive Economic Partnership (RCEP). It said joining RCEP would have badly hurt Indian manufacturing, because it would have been like signing a free trade deal with China.
The government said India has concluded eight trade agreements in recent years, including with the UAE, Australia, Mauritius, the four EFTA countries, the UK, Oman, New Zealand and the European Union.
India-US Bilateral Trade Agreement (BTA)
The India-US Bilateral Trade Agreement is a trade deal that India and the United States are negotiating. It aims to make it cheaper and easier for each country to sell goods and services to the other. It does this by cutting tariffs (import taxes), removing other trade barriers and setting common rules. The US is one of India's largest trading partners and its biggest export market for goods.
The government says the BTA is almost complete and that it will not open India's sensitive sectors, such as farming and dairy. It also wants India to face lower US tariffs than competing exporters like Vietnam and Bangladesh. That would give Indian goods a price advantage in the US market.
Regional Comprehensive Economic Partnership (RCEP)
The Regional Comprehensive Economic Partnership, or RCEP, is a free trade agreement among 15 Asia-Pacific countries. Its members are the ten ASEAN countries plus China, Japan, South Korea, Australia and New Zealand. Members agree to remove import taxes on most goods they trade with each other and to follow common trade rules. By population and economic size, it is one of the largest trade blocs in the world.
The government has again said that leaving RCEP saved Indian manufacturing from heavy Chinese competition. It presents this as proof that India signs only deals that protect its sensitive sectors, and uses the same reasoning for the US deal.
Sensitive Sector Protection in Trade Agreements
When two countries sign a trade deal, they do not cut taxes on every product. Each country keeps a list of products where it does not cut import taxes at all, or cuts them only a little. These are called sensitive sectors, and they are written into an "exclusion list" or "sensitive list". They are usually products where millions of small producers would be hurt by a flood of cheap imports.
The government says the India-US deal shields Indian farmers and other sensitive sectors. In practice, this means farm and dairy items are expected to stay out of the tariff cuts, or get only limited, controlled openings.
- India-US BTA: first-phase framework announced 7 February 2026; US tariff on most Indian goods to fall to 18% under it
- US Supreme Court struck down IEEPA-based tariffs in February 2026 (6-3 ruling)
- Mission 500: target of US $500 billion India-US trade by 2030 (set February 2025)
- RCEP: talks launched November 2012; India stayed out from November 2019; signed 15 November 2020; in force 1 January 2022; 15 members
- RCEP members: 10 ASEAN countries + China, Japan, South Korea, Australia, New Zealand
- India says it has concluded 8 trade agreements in recent years, including with the UAE, Australia, Mauritius, EFTA (Iceland, Liechtenstein, Norway, Switzerland), the UK, Oman, New Zealand and the EU
- WTO rule for FTAs: GATT Article XXIV, must cover "substantially all the trade"