US President Donald Trump has hinted at a “very big” trade deal with India that could reshape economic ties between the two nations. This announcement comes immediately after the US finalised a significant trade agreement with China, raising expectations for a similar breakthrough with India in the coming weeks.

During a recent White House event, President Trump declared, “We have one coming up, maybe with India. Very big one. Where we’re going to open up India. In the China deal, we are starting to open up China.” He emphasised that while the US is not looking to strike deals with every country, India is a priority, signalling a shift in Washington’s trade strategy.

The timing of Trump’s remarks is crucial. Indian trade negotiators have landed in Washington for what is widely considered the final round of talks before a July 9 deadline, which marks the end of a temporary pause on reciprocal tariffs between the two countries. If a deal is not reached, the US could reimpose higher tariffs on Indian goods, a move that both sides are keen to avoid.

The proposed trade pact, informally referred to as a Bilateral Trade Agreement (BTA), is expected to cover a wide range of sectors. Key focus areas include energy, agriculture, defence, and digital trade. For India, the deal presents an opportunity to secure greater access for its goods and services in the American market, encourage investment, and strengthen its strategic partnership with the US.

However, negotiations have not been without hurdles. The US has pressed India to reduce its high tariff barriers, especially on American automobiles, medical devices, and agricultural products. Agriculture remains a particularly sensitive issue for India, with officials cautious about opening up the sector too widely. Despite these challenges, both sides have signalled optimism, with Union Commerce and Industry Minister Piyush Goyal stating that the agreement will be “fair, balanced, and mutually beneficial”.

Energy Trade

Energy trade is another cornerstone of the discussions. India’s rising demand for energy, particularly liquefied natural gas (LNG), aligns with US interests as a major exporter. Indian imports of US crude oil have already seen a notable increase, and a deeper energy partnership could help address India’s trade deficit with the US while enhancing its energy security.

The talks also touch upon digital trade, technical standards, and customs cooperation, aiming to modernise the agreement for the realities of 21st-century commerce. Both governments are aware of the stakes, with bilateral trade already reaching $131.84 billion in the last financial year, making India the US’s largest trading partner.

As the July 9 deadline approaches, there is cautious optimism that an interim deal can be reached, paving the way for a more comprehensive free trade agreement by the end of 2025. The White House has hinted that the deadline could be extended if talks show progress, providing negotiators more time to iron out remaining differences.