The US has now alienated itself from China, and given the tariff war, it needs the large Indian market, just as India needs to secure its largest export market. Therefore, the two countries need the trade deal – the negotiations for which began on 23 April, 2025 in Washington. India is looking forward to closing a mini deal or an early tranche, within the 90-day tariff pause window given by the US.

What India needs to rethink to benefit from the trade deals?

As India is trying to close multiple trade agreements in a globally uncertain trade scenario, the core question is what India should focus on in its trade deals, that help to maximize benefits from trade agreements, enhance its share in global value chains, and manage domestic opposition to opening up of sensitive sectors like agriculture or automobile and auto-components. India has already started opening up sensitive sectors like alcohol and agri-products in its trade agreements with Australia and more recently with the UK. As trade agreements are becoming deeper and the trade partners are asking for regulatory certainty, it is the right time for India to use the trade agreements to implement domestic reforms to attract investment and improve industry competitiveness, especially of India’s micro, small, and medium enterprises (MSMEs). In some cases, reforms may require regulatory changes (like setting up a process for imports of organic products which will help to import organic ingredients for Make in India), while in others, tweaking the existing foreign direct investment (FDI) and other policies could help India to get more investment and assume a more significant role in the global value chains. For instance, in the Union Budget (2025-26), an announcement was made to liberalize FDI in the insurance sector. Further liberalizing FDI in sectors like e-commerce and retail and specifically allowing FDI in inventory-based e-commerce, will help in attracting investment in supply chain and infrastructure development.