Deal with U.S. ‘very near’, teams are engaging virtually on pending issues: Commerce Secretary

The announcement by India's Commerce Secretary regarding a prospective trade deal with the United States being 'very near' signifies a crucial juncture in the evolving economic relationship between the two nations. This development is not an isolated event but rather the culmination of years of diplomatic efforts, negotiations, and a shared strategic vision that extends beyond mere commerce.

**Background Context and Historical Trajectory:**

India and the U.S. have historically shared a complex yet increasingly robust relationship. While initial years post-Indian independence saw periods of divergence, the economic liberalization in India in 1991 and the subsequent geopolitical shifts, particularly in the 21st century, have propelled them towards a strategic partnership. The U.S. has emerged as one of India's largest trading partners and a significant source of foreign direct investment. However, despite this growth, a comprehensive bilateral trade agreement has remained elusive, often hampered by specific disagreements on market access, tariffs, intellectual property rights, and agricultural subsidies. During the Trump administration, trade frictions intensified, notably with the U.S. withdrawing India's Generalized System of Preferences (GSP) status in June 2019, leading to retaliatory tariffs from India on certain U.S. products. These challenges underscored the need for a structured framework to address trade irritants and unlock the full potential of their economic engagement. The ongoing virtual discussions suggest a pragmatic approach to resolve these 'pending issues' incrementally, rather than waiting for a grand, all-encompassing Free Trade Agreement (FTA).

**What Happened and Key Stakeholders:**

The core of the news is the Commerce Secretary's statement indicating proximity to a trade deal and the ongoing virtual engagement between teams to iron out remaining differences. This implies a significant breakthrough in negotiations that have likely been proceeding for months, if not years. The released trade data, showing India's merchandise exports to the U.S. hitting a five-month high of $7.01 billion in December 2025 (up from $6.89 billion in December 2024), provides a tangible backdrop, illustrating the inherent strength and upward trajectory of bilateral trade even in the absence of a finalized deal. This positive trade momentum serves as a powerful incentive for both sides to conclude an agreement.

Key stakeholders involved are numerous. On the Indian side, the **Ministry of Commerce and Industry** leads the negotiations. Indian exporters, particularly from sectors like textiles, pharmaceuticals, engineering goods, gems & jewellery, and agricultural products, stand to gain significant market access. Small and Medium Enterprises (MSMEs) also eye opportunities for growth. On the U.S. side, the **U.S. Trade Representative (USTR)** and the **U.S. Department of Commerce** are central. American companies, especially those in technology, agriculture, and medical devices, advocate for reduced tariffs and improved market access in India. Industry lobbies in both countries play a crucial role in shaping policy demands and influencing negotiating positions.

**Significance for India and Broader Themes:**

This potential deal holds immense significance for India. Economically, it promises to boost India's exports, helping achieve the ambitious target of $1 trillion in merchandise exports by 2030, and potentially narrowing any trade deficit. Enhanced market access to the world's largest economy will provide a Fillip to domestic manufacturing under the 'Make in India' initiative, creating jobs and fostering economic growth. It also helps in diversifying India's export basket and reducing reliance on specific markets. Politically and strategically, a robust trade deal strengthens the India-U.S. strategic partnership, which is vital for India's foreign policy objectives, particularly in the Indo-Pacific region. It reinforces India's position as a reliable and significant global economic player, aligning with broader themes of global governance, resilient supply chains, and counterbalancing geopolitical influences.

**Constitutional Provisions and Future Implications:**

From a constitutional perspective, international trade agreements fall under the purview of the Union Government. **Article 253** of the Indian Constitution empowers Parliament to make laws for implementing any international treaty, agreement, or convention. Furthermore, entries 14 (entering into treaties and agreements with foreign countries) and 41 (trade and commerce with foreign countries; import and export across customs frontiers) in the **Union List (List I) of the Seventh Schedule** clearly delineate the central government's authority in this domain. India's **Foreign Trade Policy (FTP)**, periodically updated, provides the framework for such engagements, aiming to boost exports and integrate India into the global trading system.

Looking ahead, this 'very near' deal could be a 'limited trade package' or 'mini-deal' that resolves specific, long-standing irritants. Such a deal could pave the way for a more comprehensive Free Trade Agreement (FTA) in the future, unlocking even greater economic potential. It signals a commitment from both nations to deepen their economic engagement, attract more Foreign Direct Investment (FDI), and collaborate on critical and emerging technologies. The resolution of trade disputes through negotiation rather than confrontation sets a positive precedent, fostering greater predictability and confidence for businesses on both sides. However, challenges will remain, including navigating global trade protectionism, addressing new trade barriers, and ensuring that future agreements are equitable and mutually beneficial, especially for India's developing economy and its vast agricultural sector.