India’s Trade Opening Needs Durable US Reciprocity

As India and the US continue negotiations for a Bilateral Trade Agreement, the central question is no longer whether New Delhi is prepared to open its market. India has already moved across tariffs, non-tariff barriers, investment, digital trade and export facilitation.

The question is whether those commitments are being matched by American market access that is measurable, legally durable and capable of surviving changes in Washington’s tariff policy.

The negotiations were launched by Prime Minister Narendra Modi and US President Donald Trump in February 2025, when the two countries set a target of taking bilateral trade to $500 billion by 2030. The framework announced in February 2026 was intended to lead first to an Interim Agreement and subsequently to a broader BTA.

The language of the framework was appropriately ambitious. It spoke of reciprocal and balanced trade based on mutual interests and concrete outcomes. But reciprocity is not established merely by placing commitments from both countries in the same document. It must also be reflected in their timing, legal enforceability and commercial value.

That is where the emerging imbalance deserves attention. Indian commitments are increasingly specific and capable of being implemented through changes in tariffs, regulations and administrative practice. Several of the corresponding American benefits remain conditional, dependent on executive action or vulnerable to subsequent unilateral tariff measures.

Concession Ledger
Even before the February framework, India had begun rationalising parts of its customs structure. The Union Budget presented on February 1 reduced the tariff on dutiable goods imported for personal use from 20% to 10%, exempted basic customs duty on 17 drugs and medicines, doubled the duty-deferral period for Tier 2 and Tier 3 Authorised Economic Operators to 30 days and introduced measures to expedite export cargo clearance.

Not every Budget measure should be counted as a concession to Washington. Some were economy-wide reforms intended to improve trade facilitation, support Indian exporters or reduce costs for domestic consumers. But their cumulative direction is still relevant. They demonstrate that India was already willing to simplify tariffs and customs procedures in areas that also addressed concerns frequently raised by foreign businesses.

The February framework went considerably further. India agreed to eliminate or reduce tariffs on all US industrial goods and a wide range of agricultural and food products, including tree nuts, fruits, soybean oil, wine and spirits. It also agreed to address barriers affecting American medical devices, remove restrictive import-licensing procedures for information and communication technology goods and consider the acceptance of US-developed or international standards in identified sectors.

These are not peripheral adjustments. They reach into tariff protection, agricultural market access, product standards, licensing and domestic regulatory processes. Some will be commercially significant for US exporters and politically sensitive within India.

Digital Opening
India has also moved on cross-border e-commerce. The government has operationalised a framework permitting foreign-funded e-commerce companies to undertake inventory-based operations exclusively for exports of goods manufactured or produced in India. Eligible entities may procure goods against confirmed overseas orders through a registered exporter-on-record, while export inventory cannot be diverted into the domestic market.

The measure should not be mistaken for a general opening of India’s domestic inventory-led e-commerce market. It is an export-facilitation reform designed to help Indian manufacturers, artisans and smaller businesses use organised global fulfilment networks. Nevertheless, it also provides international platforms with greater operational flexibility and addresses a long-standing business concern.

The more direct digital-trade commitment lies in the bilateral framework itself. India and the US agreed to address discriminatory or burdensome digital-trade practices and work towards ambitious digital-trade rules as part of the BTA. That undertaking could eventually cover issues extending beyond payments or e-commerce to data governance, platform regulation and digital services.

Washington, for its part, did place meaningful commitments on the table. It agreed to apply an 18% reciprocal tariff to originating Indian goods and, subject to successful conclusion of the Interim Agreement, remove that tariff from products including generic pharmaceuticals, gems and diamonds, and aircraft parts.

The framework also promised the removal of certain national-security tariffs on Indian aircraft and aircraft parts, a preferential tariff-rate quota for automotive components and negotiated outcomes for generic pharmaceuticals and pharmaceutical ingredients, depending on the findings of the relevant Section 232 investigation.

A balanced assessment must recognise those offers. The proposed agreement is not a one-way opening in which Washington has offered nothing. But there is an important distinction between a stated future benefit and a market-access gain that has become legally operative.

Several American offers were conditional on the successful conclusion of the Interim Agreement, the outcome of domestic investigations or the continued validity of the executive authority under which the tariffs had been imposed. That distinction became important within weeks of the framework being announced.

Durability Test
The February framework’s 18% tariff commitment was based on the reciprocal-tariff system imposed under the International Emergency Economic Powers Act. On February 20, the US Supreme Court ruled that the law did not authorise the president to impose tariffs. The judgment did not amount to Washington deliberately withdrawing a negotiated concession, but it demonstrated how legally fragile that concession had been.

The administration responded by imposing a temporary 10% global import surcharge under Section 122 of the Trade Act. That surcharge took effect on February 24 and was expressly limited to 150 days.

When the temporary surcharge reached the end of its statutory period, the US tariff regime changed again. A new Section 301 action took effect on July 24, imposing a 10% duty on covered Indian imports in connection with the enforcement of prohibitions on goods produced with forced labour.

India had adopted a forced-labour import prohibition after the US Trade Representative published its proposed action in June. The USTR acknowledged that step and placed India in the 10% category rather than the 12.5% category proposed for economies that had not taken equivalent action.

But the episode also illustrates the limits of headline reciprocity. India moved in response to an American concern, yet the immediate commercial return was a lower additional tariff rather than the removal of the tariff. Unlike the Section 122 surcharge, the Section 301 action does not carry the same automatic 150-day sunset.

The operative question for exporters is also not whether the headline number is 18% or 10%. What matters is the final landed tariff after the ordinary US duty, product exemptions, Section 232 measures, trade remedies and other additional charges have been taken into account.

Negotiating Safeguards
Indian exporters cannot plan investment, production or long-term supply contracts on the basis of a tariff promise that may be overtaken by a court judgment, replaced by another statutory mechanism or supplemented by a fresh trade action. Predictability is itself a form of market access.

The framework contains a useful safeguard by allowing either country to modify its commitments if the other changes the agreed tariffs. But the final agreement must turn that general provision into an effective mechanism, specifying when concessions may be suspended, how quickly consultations must begin and what happens when a new tariff is imposed under a different US law.

There is also the proposed $500 billion purchase commitment. India has stated that it intends to purchase that amount of US energy products, aircraft and aircraft parts, precious metals, technology products and coking coal over five years. The framework also envisages significantly higher trade in graphics processing units and data-centre equipment.

The word “intends” is important. Much of this purchasing would be undertaken by companies rather than directly by the government, and some imports may have occurred even without an agreement. The final arrangement therefore needs a clear baseline, sector-wise schedule and monitoring framework before the entire $500 billion can be treated as an Indian concession.

The unfinished part of the negotiation is not whether India can move quickly. It is whether New Delhi can convert that willingness into durable commercial gains for its own exporters.

The Parliamentary Standing Committee on Commerce has already called for stable and predictable access for Indian products. Its recommendations include seeking protection for generic medicines, critical minerals and smartphones from future unexpected US tariffs, while prioritising engineering goods, automotive components, textiles, gems and jewellery, chemicals and metal products in the negotiations.

That requires more than another aggregate tariff number. India should seek product-specific tariff schedules, defined exemptions from future surcharges, clear treatment under Sections 232 and 301, mutual recognition of standards, predictable customs procedures and a time-bound dispute-resolution mechanism.

Implementation should also be sequenced. India’s next major tariff reduction or regulatory concession should take effect only when the corresponding US tariff reduction, exemption or market-access commitment becomes legally operative.

Where an American concession is withdrawn, invalidated or replaced by another duty, the matching Indian commitment should automatically be suspended or reopened. Given the repeated changes in the US tariff regime, such provisions are no longer technical safeguards. They are central to the commercial value of the agreement.

India has shown that it is prepared to move on trade and investment policy when it sees a strategic opportunity. The next phase of the negotiations must ensure that movement does not run ahead of the return. Ends