India, US edge closer to trade deal as PMO steps in

With the Prime Minister’s Office (PMO) driving negotiations, India has finalized the Terms of Reference (ToR) for a much-anticipated Bilateral Trade Agreement (BTA) with the US. The move, coming just a day before US reciprocal tariffs take effect on April 2, marks a significant push towards resolving longstanding trade disputes.

The ToR, a crucial framework guiding negotiations, typically requires top-level political approval. “The PMO is keen on swiftly closing the deal,” a senior government official said. Talks with US negotiators last week ended without a final agreement, but both sides are now ready for formal discussions. India is expected to lower tariffs on American imports in exchange for reciprocal concessions from Washington.

US President Donald Trump on April 1 hinted at a breakthrough. “I heard that India is going to be dropping its tariffs substantially. A lot of countries are going to drop their tariffs,” he said during a White House press briefing, suggesting potential relief from sweeping US-imposed tariffs.

Washington’s trade demands: Agriculture, digital governance, and IP

As negotiations gain momentum, the United States Trade Representative (USTR) has flagged key trade barriers in its annual ‘Foreign Trade Barriers’ report, covering 29 major partners. The report lists concerns about India’s policies on internet regulation, agricultural imports, and data localization—issues that could shape the upcoming trade deal.

Ajay Srivastava, former Indian trade official and head of the Global Trade Research Initiative (GTRI), cautioned against compromising national priorities under US pressure. “Many proposed changes in areas like agriculture, digital governance, and public health could undermine India’s ability to protect its small farmers, ensure food safety, and safeguard its digital future,” he said. “India is not against reform but expects fairness, reciprocity, and respect for sovereignty.”

USTR flags barriers from internet shutdowns to dairy feed rules

The USTR report criticizes India’s policy of localized internet shutdowns, which it claims disrupt commercial operations. It also takes issue with India’s dairy import regulations, which require exporting countries to certify that dairy products come from animals not fed blood meal or other animal-derived substances—requirements the US calls unscientific and restrictive.

The report further highlights India’s restrictions on genetically modified (GM) food imports, calling the certification process opaque and politically influenced. It claims that India’s biotech approval mechanisms lack transparency and fail to align with science-based global standards.

Tensions over agriculture and import policies

US negotiators remain concerned about India’s agricultural support programs, which they argue distort global trade. India, however, has countered that US farm subsidies are far higher than its own. The report also criticizes India’s restrictions on pulse imports and bureaucratic hurdles on products like boric acid, which it claims favor domestic manufacturers.

In the medical sector, the US has raised objections to India’s price controls on coronary stents and knee implants, arguing that they fail to keep pace with inflation and may discourage American companies from operating in the Indian market.

Digital trade, patents, and tariffs: Major sticking points

The USTR report highlights friction over India’s data localization rules, which mandate that payment service providers and banks store transaction data within the country. The US claims this hampers fraud detection and cybersecurity on global networks. Additionally, Washington is pushing India to adopt an ‘open skies’ satellite policy, which could open the market for American firms like Elon Musk’s Starlink.

Intellectual property (IP) remains a contentious area, with US concerns ranging from patent delays to insufficient protection for trade secrets. The report criticizes India’s copyright enforcement and lengthy trademark opposition processes, warning that inconsistent IP protections deter American investment.

On tariffs, Washington remains frustrated with India’s high applied rates on key imports, including automobiles, agricultural goods, and alcoholic beverages. The US argues that the gap between India’s WTO-bound and applied tariff rates creates an unpredictable trade environment.

The road ahead

As India and the US move toward formal trade negotiations, both sides are weighing economic priorities and strategic interests. The PMO’s intervention signals India’s readiness for engagement, but New Delhi will likely push back against demands that compromise national interests. With digital trade, agriculture, and tariffs emerging as flashpoints, the outcome of these negotiations could redefine the future of US- India economic relations.