India, US 'very close' to trade deal, need to get over last hurdle, Deputy Secretary of State Christopher Landau says

The US Deputy Secretary of State stated that India and the United States are "very, very close" to signing a trade deal, with only a "last hurdle" remaining ...

What Happened

The US Deputy Secretary of State stated that India and the United States are "very, very close" to signing a trade deal, with only a "last hurdle" remaining in negotiations.
Talks have been ongoing since early 2026, targeting a Bilateral Trade Agreement (BTA) with the broader goal of reaching USD 500 billion in bilateral trade by 2030.
An interim framework for reciprocal trade was reached in February 2026, under which the US agreed to reduce the reciprocal tariff on Indian exports from 25% to 18%.
A US Supreme Court ruling in February 2026 struck down Trump's reciprocal tariffs imposed under the International Emergency Economic Powers Act (IEEPA), injecting legal uncertainty into the deal's framework and necessitating recalibration of the agreement.
India is seeking legally durable preferential market access to the US, while the US has conditioned aspects of the arrangement on India reducing dependence on Russian oil.

Static Topic Bridges

Bilateral Trade Agreements and WTO Compatibility — GATT Article XXIV

A Bilateral Trade Agreement (BTA) is a legally binding accord between two countries governing tariffs, market access, and trade rules. Under WTO law, bilateral and regional free trade agreements are permitted as exceptions to the Most Favoured Nation (MFN) principle, provided they comply with GATT Article XXIV. This article requires that an FTA eliminate customs duties and other restrictive regulations on "substantially all the trade" between the signatory parties — interpreted broadly as covering approximately 90% or more of bilateral trade.

GATT Article XXIV.8(b) defines the threshold for a Free Trade Agreement — elimination of duties and barriers on "substantially all" trade between members.
An "interim agreement" leading to an FTA is explicitly permitted under Article XXIV.5(c), with a reasonable timeframe for reaching the final agreement.
WTO Members must notify the WTO of any FTA/interim agreement and submit to review by the Committee on Regional Trade Agreements (CRTA).
The "Enabling Clause" (1979 GATT Decision) separately allows developed nations to grant preferential access to developing countries without extending MFN treatment to all members — this is the legal basis of the Generalized System of Preferences (GSP).
India lost its GSP status with the US in 2019; the current BTA negotiations partly aim to restore and expand that preferential access.

Connection to this news: The India-US BTA, once finalized, would need WTO notification under Article XXIV. The interim framework struck in February 2026 qualifies as an "interim agreement" under Article XXIV.5(c), allowing phased implementation while full BTA negotiations continue.

International Emergency Economic Powers Act (IEEPA) and Trade Policy Instruments

The IEEPA is a 1977 US federal law that grants the President broad authority to regulate international commerce and impose economic sanctions in response to declared national emergencies. It has historically been used for sanctions against Iran, Russia, and others. The Trump administration invoked IEEPA to impose reciprocal tariffs on trading partners, including India — a novel and legally contested application of emergency powers to broad tariff policy.

IEEPA (50 U.S.C. §1701 et seq.) requires a formal declaration of national emergency by the President.
The US Supreme Court's February 2026 ruling struck down broad IEEPA-based reciprocal tariffs, holding they exceeded the statute's scope.
Prior to IEEPA tariffs, the standard US trade authority instrument is Trade Promotion Authority (TPA), under which Congress sets negotiating objectives and approves final deals through a fast-track procedure.
The affected Indian goods faced a 25% reciprocal tariff (reduced to 18% under the interim framework); a baseline 10% universal tariff remains in place for most countries pending legal resolution.

Connection to this news: The Supreme Court ruling introduced legal uncertainty into the tariff architecture underpinning the India-US interim agreement, requiring India to await a more legally stable framework before finalising the BTA.

India's Trade Policy Framework and the USD 500 Billion Target

India's trade policy is guided by the Foreign Trade Policy (FTP), issued by the Ministry of Commerce and Industry under the Foreign Trade (Development and Regulation) Act, 1992. India's bilateral trade with the US stood at approximately USD 190 billion in FY2024-25, making the US India's single largest trading partner. The aspirational target of USD 500 billion by 2030 represents more than a doubling of current bilateral trade.

India-US goods trade: approximately USD 129 billion (India exports ~USD 84 billion; imports ~USD 45 billion) in FY2024-25 — giving India a significant trade surplus.
Key Indian export sectors to the US: pharmaceuticals, IT services, textiles, gems and jewellery, engineering goods.
India's Foreign Trade Policy 2023 focuses on export diversification, recognizing FTAs as a tool to reduce tariff barriers.
The US is India's largest export destination; China is the largest source of imports for India.
India has FTAs in force with ASEAN, Japan, South Korea, UAE (CEPA, 2022), and Mauritius; the India-EU FTA and India-UK FTA negotiations are ongoing as of 2026.

Connection to this news: The BTA, if concluded, would be India's first bilateral trade agreement with a major Western economy (the US), representing a significant shift from India's traditional caution toward bilateral deals with developed countries.

Key Facts & Data

Current US reciprocal tariff on Indian exports: reduced from 25% to 18% under the February 2026 interim framework.
Baseline universal US tariff (applying to most countries): 10% (under challenge in US courts as of May 2026).
India-US bilateral trade target: USD 500 billion by 2030.
Current bilateral trade: approximately USD 190 billion (FY2024-25).
India's trade surplus with the US: approximately USD 39 billion (goods trade, FY2024-25).
GATT Article XXIV requires elimination of barriers on ~90% of bilateral trade for WTO-compliant FTAs.
India lost US GSP (Generalized System of Preferences) status in June 2019.
IEEPA enacted: 1977 (US); Supreme Court ruling against IEEPA-based tariffs: February 2026.