First tranche of India-US trade deal to focus mostly on reciprocal tariffs

New Delhi wants the entire 50 per cent US tariffs imposed in August this year, which includes 25 per cent reciprocal tariffs and 25 per cent penalty for buying Russian oil, to be addressed in the first tranche
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AmyLaughinghouse

The first tranche of the India-US bilateral trade agreement (BTA) — which could be “nearing completion” — is primarily focussed on addressing the 50 per cent reciprocal and penal tariffs on Indian goods in return for market access for certain US goods in India, official sources have said.

It is only after the reciprocal tariffs are dealt will the two countries move to the subsequent tranches where other aspects of the trade agreement, including further market access for both sides, will be taken up, the source added.

India’s demand

New Delhi wants the entire 50 per cent US tariffs imposed in August this year, which includes 25 per cent reciprocal tariffs and 25 per cent penalty for buying Russian oil, to be addressed in the first tranche. “A bilateral deal will not have any meaning if only half the tariffs are addressed,” the official said adding that Indian goods will then stay uncompetitive.

US President Donald Trump and his team of officials have been insisting that the penal tariffs on India will be lowered when the country stopped purchasing oil from Russia, which is the country’s top supplier of crude. 

The US alleges that the oil earnings are used by Russia to finance its war on Ukraine, but the Indian argument is that it is not fair to single out the country as many others are doing the same, and it has not been going against any given restrictions.

“The penalty of 25 per cent tariffs for buying Russian oil had been imposed on India unilaterally without any discussions. We expect it to be rolled back in full,” another source said.

Oil buy

With India bringing down its oil purchase from Russia after the US imposed sanctions on Russian oil companies Rosneft and Lukoil, there are expectations that it may be regarded positively by the Trump government. Delhi, however, does not want to give any assurances of halting oil purchases from Russia, the source said.

The one-year contract signed by Indian PSU oil companies to import around 2.2 million tonnes of LPG from the US in 2026 may also serve to soften the country.

India’s exports to the US, its largest export market, have contracted (year-on-year) for two consecutive months–September and October–following the imposition of 50 per cent duties. 

But the government is hopeful that the recent withdrawal of reciprocal duties on a range of agricultural goods by the US, including spices, processed food and tea & coffee, would help create level playing field for $1 billion worth of Indian exports to the country.

While a lot of progress has been made on the first tranche of the India-US BTA and it was expected to be finalised soon, it was not possible to say when that would happen, the first official pointed out.

“India and the US are likely to announce the first tranche of the bilateral trade deal together once it is finalised,” the official said.

Published on November 17, 2025