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India
Christopher Lynch, the US Assistant Trade Representative for South and Central Asia, is set to visit India from March 25-29, leading a delegation for crucial trade discussions with Indian officials. The visit underscores the commitment of both nations to strengthening economic ties and working towards a balanced trade relationship.
“This visit reflects the United States’ continued commitment to advancing a productive and balanced trade relationship with India,” said a spokesperson from the US embassy. “We value our ongoing engagement with the government of India on trade and investment matters and look forward to continuing these discussions in a constructive, equitable, and forward-looking manner.”
A representative from India’s commerce ministry also confirmed the visit, reiterating India’s dedication to fostering economic growth through bilateral collaboration. “As directed by the leaders of the two countries, India remains committed to working with the US side in the trade and economic domains to enhance prosperity and innovation in both India and the US and deepen supply chain integration between the two countries,” he stated. “We look forward to productive and constructive discussions with the incoming US delegation to expand and deepen our bilateral trade and economic ties in a mutually beneficial manner.”
India and US Look to Bypass WTO Barriers
A major topic on the agenda is finalizing a framework for a bilateral trade agreement. Sources familiar with the discussions highlighted that reducing Most-Favoured Nation (MFN) tariffs could inadvertently benefit China under global trade regulations. To avoid this, both India and the US are focusing on negotiating an exclusive trade agreement rather than extending trade benefits broadly under WTO rules.
“The goal is to create a structure where both partners reduce tariff and non-tariff barriers for each other while ensuring that these benefits remain exclusive,” a source explained. “This requires a legal framework to prevent MFN provisions from automatically extending to all WTO members.”
A full-fledged Free Trade Agreement (FTA) is not immediately on the table. Instead, the two sides may opt for an “early harvest” deal—an initial trade agreement that could eventually lead to a comprehensive FTA. “If India simply lowers MFN tariffs, it will open the floodgates for Chinese goods. Therefore, a step-by-step bilateral trade framework is essential to ensure economic gains for both India and the US while protecting their industries from external competition,” the source added.
The Path to a $500 Billion Trade Target
The upcoming discussions build upon commitments made during Prime Minister Narendra Modi and former US President Donald Trump’s meeting in Washington last month. At that meeting, both leaders agreed to finalize the first phase of a trade deal by the fall of 2025, setting the stage for more extensive trade cooperation.
“The two countries are looking at more than doubling bilateral trade to $500 billion by 2030,” said a person familiar with the negotiations. “Both leaders have agreed on reducing barriers to trade and investment, but the framework must be legally sound to ensure that only the two countries benefit from this arrangement.”
Managing Trade Deficits with China
Both India and the US face significant trade deficits with China, a concern that is shaping the structure of the proposed trade agreement. The latest UNCTAD Global Trade Update for March 2025 highlighted global trade imbalances, noting that the US continues to hold the world’s largest trade deficit, while China maintains the highest surplus.
According to the US Trade Representative’s (USTR) office, the US goods trade deficit with China reached $295.4 billion in 2024, reflecting a 5.8% increase from the previous year. In comparison, the US trade deficit with India stood at $45.7 billion in 2024, a 5.4% rise from 2023.
India’s trade deficit with China has also been widening, touching $83.52 billion in the first 10 months of the 2024-25 fiscal year, nearly matching the full-year deficit of $85.06 billion recorded in 2023-24.
Bilateral Trade Agreement vs. Free Trade Agreement
Under WTO rules, MFN treatment ensures that any tariff reductions must be extended to all 166 member nations unless they fall within an established free trade agreement. While India and the US are not yet labeling their proposed trade pact as an FTA, they may formally notify the WTO once a deal is reached, categorizing it as a precursor to a future FTA.
At their February 13 meeting, Modi and Trump laid the groundwork for a bilateral trade agreement, focusing on expanding market access, reducing tariffs, and strengthening supply chain integration.
Following this, India’s Commerce Minister Piyush Goyal met with US Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer in early March to create a roadmap for the agreement.
Lynch is well-versed in India-US trade talks, having played a key role in previous negotiations under Trump’s first presidential term. He has been actively involved in managing the India-US Trade Policy Forum and previously served as USTR’s director for India, overseeing key trade discussions.
