- The US assured India of a competitive tariff advantage in the trade agreement talks
- The final tariff structure depends on the outcome of a US Section 301 investigation
- The investigation covers 60 economies and examines forced labour import bans
The United States has assured India that the proposed trade agreement will provide it with a competitive tariff advantage over rival countries, even as negotiations continue on the first tranche and the broader bilateral trade agreement (BTA).
However, the final tariff structure remains linked to the outcome of Washington's second investigation under Section 301, government sources told NDTV Profit.
The second probe, launched by the Office of the US Trade Representative (USTR) in March 2026, covers 60 economies, including India. It examines whether countries have effectively prohibited imports of goods produced using forced labour.
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The investigation could influence the tariff treatment offered to Indian exporters, making its findings an important factor in finalising the agreement.
India is seeking preferential treatment against competing manufacturing destinations, particularly in sectors such as textiles, where exporters face competition from countries across South and Southeast Asia. The assurance of a comparative advantage is significant for Indian manufacturers looking to strengthen their position in the American market.
Negotiations are continuing on both the first tranche of the agreement and the wider BTA. The two countries had announced a framework for an interim trade agreement in February 2026.
However, subsequent changes in the US tariff regime and fresh trade investigations have required further discussions.
Services-related issues will also feature in the broader BTA, extending negotiations beyond merchandise trade. This is important for India, given its strong presence in information technology, professional services and other service exports.
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Commerce and Industry Minister Piyush Goyal recently described the negotiations as smooth, saying only a few issues remained unresolved. He also expressed confidence that India would secure highly favourable access to the US market.
The key challenge now is translating the tariff assurance into binding terms. Until the Section 301 investigation concludes, uncertainty over the final tariff framework remains a major variable for Indian exporters.
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