India and the United States may be close to finalising a long-awaited trade agreement, but New Delhi has made it clear it will not proceed unless the deal ensures a competitive advantage for Indian exporters over neighbouring countries.
Union Commerce and Industry Minister Piyush Goyal said India has already agreed on the broad outline of the pact with the Donald Trump administration. However, he stressed that the agreement will only take effect if the US establishes a framework that guarantees lower tariffs for Indian goods compared to rival Asian economies.
Speaking at the India Global Forum’s “UK-India Week 2026: Capital Frontiers” event in London, Goyal explained why India is not rushing to finalise the deal despite both sides indicating that negotiations are near completion.
Why India is holding back
Goyal said the negotiations were originally designed around a key benefit for India.
“The whole deal was centred around that competitive advantage we got with that 18 per cent over our neighbours and competing countries. We were lower than all our neighbouring countries and all our ASEAN countries other than Singapore. That is why the deal was attractive for us,” he said.
The framework was initially developed when reciprocal tariffs under the US International Emergency Economic Powers Act (IEEPA) placed India under a 50 per cent tariff burden. Under the proposed arrangement, those tariffs were expected to fall to 18 per cent, giving Indian exporters an edge.
What changed
However, the situation shifted after the US Supreme Court struck down the reciprocal tariffs, prompting a rethink of the agreement’s structure.
Goyal noted that these legal developments mean both sides now need to revisit parts of the deal before it can be implemented.
“With the Supreme Court striking down the tariffs and the 10 per cent which expires on July 24, we obviously have to have some reason to be able to enter into force that agreement we have already agreed upon,” he said.
India’s demand for a “competitive edge”
The minister clarified that India is not seeking preferential treatment, but wants to ensure it remains more competitive than countries with similar manufacturing costs.
“We have to ensure that we get a competitive advantage over what is being paid by countries in the same stage of development or same cost structures as India has, whether it is Vietnam, Thailand, Philippines, Indonesia, China, Malaysia, apart from Bangladesh, Sri Lanka and all our neighbours,” he said.
He added that India will not move ahead unless the US creates a legal and policy framework that preserves this advantage.
“Until that framework of getting that competitive advantage can be finalised, we can't enter into force a US deal… The day that happens, the deal is on,” Goyal said.
Talks in final stage
The comments come shortly after US Trade Representative Jamieson Greer’s visit to New Delhi, where he met Indian officials to discuss the first phase of the bilateral trade agreement. Earlier rounds of negotiations had already taken place this month.
US President Donald Trump has also said the two countries are “very close” to finalising the deal.
The interim framework, first outlined in February, proposed reducing US tariffs on Indian goods from 50 per cent to 18 per cent, potentially improving India’s position against several Asian competitors.
The US remains India’s second-largest trading partner. In 2025–26, India exported goods worth $87.3 billion to the US, while imports stood at $52.9 billion.
