India-US BTA won’t follow Vietnam-US deal template, sources say

Unlike Vietnam, which is highly dependent on US exports, India’s export share to the US is smaller, offering it greater negotiating flexibility. 

The India-US bilateral trade agreement (BTA) cannot be based on the template provided by the Vietnam-US trade deal as Hanoi is much more dependent on the US for its exports than India. New Delhi’s economic and political situation, as well as expectations from the deal, are unique, sources have said.

The trade deal with Vietnam, announced by US President Donald Trump on Wednesday, imposes a 20 per cent import tariff on Vietnamese goods in America, while US goods receive tariff-free entry into the country.

“There is no way the Vietnam-US trade deal could set the tone for the India-US BTA. India’s trade pact will be guided by its unique political and economic situation and not by the pact any other country signs. Although the US is India’s largest export market, Indian exporters are not as dependent on the country as Vietnam because the US’ share in India’s total exports is much less,” a source tracking the matter told businessline.

In the absence of a deal, Vietnam may have faced the full 46 per cent reciprocal tariff announced on Vietnamese goods by Trump on April 2. The tariffs were paused by the US President for a 90-day period till July 9.

Vietnam’s exports heavily reliant on US

“Almost 30 per cent of Vietnam’s exports go to the US. It had no option other than agree to the tariffs decided by President Trump as in the absence of a deal it would have been much worse off with tariffs at 46 per cent,” said international trade expert Abhijit Das.

Last year, Vietnam’s goods exports to the US were worth $136.6 billion, while the country imported goods worth $13.1 billion from the US. This led to the fourth-largest trade deficit for the US at $123.5 billion, after China, the EU, and Mexico.

India’s trade with US is more balanced and less dependent

India’s exports to the US in FY25 were significantly lower at $86.51 billion, accounting for approximately 19 per cent of its total goods exports of $437.42 billion. It imported goods worth $45.33 billion, leading to a narrower trade deficit for the US at $41 billion.

“India should continue to press for a full roll back of the 26 per cent reciprocal tariff, including the 10 per cent baseline tariff,” Das said.

Indian negotiators, who are in Washington, D.C., trying to work out an interim deal with the US before July 9 to avoid the full brunt of the reciprocal tariffs, are facing a challenge in balancing the US’s demands and offers.

“India is not able to meet US’ market access demands for sensitive items such as agriculture and dairy. The US, on the other hand is not willing to remove the 10 per cent baseline tariff for India. Neither does it want to do away with the sector specific tariffs on steel & aluminium (at 50 per cent) and auto (at 25 per cent),” the source said.

New Delhi also wants commitments from the US to bring down its MFN tariffs on labour-intensive products, such as textiles, but Washington seems not too keen.

Published on July 3, 2025