A US team led by assistant trade representative Brendan Lynch will arrive in New Delhi on Tuesday for trade discussions with Indian counterparts a little more than a week before President Donald Trump’s April 2 deadline for imposing reciprocal tariffs.
Confirming the visit, a US embassy spokesperson said on Monday that it reflects Washington’s commitment to “productive and balanced” trade ties with New Delhi. People familiar with the matter said on condition of anonymity the focus will be on finalising a framework for the proposed bilateral trade agreement (BTA), determining terms of reference (ToRs) and schedules of negotiations.
“The two teams will sit face to face on Wednesday, Thursday and Friday to discuss aspirations of each other and focus on achievable in the next six months,” one of them said. Prime Minister Narendra Modi and President Donald Trump on February 13 decided to finalise the first tranche by September 2025, he said.
On the US move to impose reciprocal tariff, he said: “When we are together working on this path, there could be some solution.”
Meanwhile, ahead of the April 2 deadline, the government proposed to remove the 6% equalisation levy (EL) through an amendment in the Finance Bill 2025, which is one of the demands of the US. “The Government had already removed EL @ 2% on e-commerce last year. Although, the 2% levy garnered more criticism from US but in anticipation of more tariff retaliation by US, the Government is trying to show a more accommodative stance and the removal of 6% EL on online advertising is a step in that direction,” said Amit Maheshwari, tax partner at AKM Global.
Trump’s threat of imposing reciprocal tariffs from April 2 have given rise to fears of an escalating trade war around the world, including India. Trump, who has repeatedly described India as a “tariff king” and a “big abuser” of trade ties, reiterated his threat last week, while the external affairs ministry said the two sides are engaged in talks to build a framework to address issues such as levies and market access.
Lynch, the assistant trade representative for South and Central Asia, and his team will be in India during March 25-29 for meetings with Indian interlocutors as part of ongoing bilateral trade discussions, the US embassy spokesperson said.
“This visit reflects the United States’ continued commitment to advancing a productive and balanced trade relationship with India,” the spokesperson said. “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 spokesperson of India’s commerce ministry confirmed Lynch’s visit along with a team of U.S. government officials. “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 said. “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,” he added.
The people cited above said India slashing “MFN tariffs” may benefit China more than the US under existing international trade laws, and that New Delhi and Washington would instead attempt to finalise a framework for a bilateral trade agreement during Lynch’s visit.
The basic issues have been settled, with Prime Minister Narendra Modi and Trump agreeing at their meeting in Washington last month to negotiate the first tranche of a mutually beneficial, multi-sector bilateral trade agreement by the fall of 2025, the people said.
This will be the first step towards the target of more than doubling bilateral trade to $500 billion by 2030, one person said. “Both leaders have agreed to reduce tariff and non-tariff barriers for each other for mutual gains. But both want this arrangement to be exclusive for the two partners. Hence, a legal framework is required first to avoid extending most-favoured nation (MFN) treatment to all World Trade Organization (WTO) members,” he said.
“Imagine if Indian lowers MFN tariffs, it will open the floodgates for Chinese goods. Therefore, the two partners are required to finalise a framework for the first tranche of the bilateral trade agreement – whether it will be an FTA or an early harvest deal, eventually culminating in a larger FTA,” he added.
India and the US have to sidestep the WTO’s principle of non-discrimination while negotiating lower tariffs under the proposed trade deal. An early harvest scheme preceding a comprehensive FTA is one option that can shield the two economies from a potential Chinese onslaught, the person said.
Lynch is no stranger to trade negotiations with India, having been part of the team that engaged in talks on a proposed trade deal during Trump’s first presidential term. Besides managing the India-US Trade Policy Forum, he earlier served as USTR’s director for India and managed the bilateral trade relationship.
Both India and the US are grappling with a huge trade deficit with China. According to UNCTAD’s Global Trade Update for March 2025 on the role of tariffs in international trade, “Global imbalances in goods trade have been increasing in 2024…The United States continues to show the largest trade deficit, while China maintains the highest surplus…Other major economies with trade deficits include India, Japan, and the United Kingdom.”
According to USTR’s website, the US goods trade deficit with China was $295.4 billion in 2024, a 5.8% increase ($16.3 billion) over 2023. In comparison, the US goods trade deficit with India was $45.7 billion in 2024, a 5.4% increase ($2.4 billion) over 2023.
India’s trade deficit with China in the first 10 months of 2024-25 (April 2024-January 2025) touched $83.52 billion, nearly matching the full fiscal year deficit of $85.06 billion in 2023-24.
MFN tariff is the basic premise of the WTO that applies equally to its 166 members. An exception is made only for FTAs between countries. But India and the US are purposely not terming their proposed bilateral trade agreement as an FTA as yet, and they may notify after the deal is done that the bilateral trade agreement would be part of a prospective FTA, the people said.
According to WTO rules, MFN treatment requires all members to be treated equally, meaning if a country lowers customs duty rates on a product for one member, the same benefit must be extended to all other WTO members. The WTO does allow certain exceptions, including when countries establish free trade agreements that apply only to goods traded within their group.
At their meeting on February 13, Modi and Trump agreed to finalise the first tranche of a bilateral trade agreement by the fall. The negotiations for this will focus on increasing market access, reducing tariff and non-tariff barriers and deepening supply chain integration, a joint statement said.
Following this, commerce minister Piyush Goyal met US commerce secretary Howard Lutnick and US Trade Representative Jamieson Greer in the US in the first week of March to establish a roadmap for the agreement.
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