In major breakthrough, U.S. assures India of comparative tariff advantage over its competitors

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In a significant breakthrough towards the conclusion of the India-U.S. interim deal on trade, the U.S. has assured India of a comparative advantage over its competitors once it finalises its tariff structure, a senior official in the Ministry of Commerce and Industry said, adding that both sides are working to complete the deal by the end of the current financial year.

Indian officials have repeatedly been saying that India would move ahead with a deal only if the U.S. assured it of a comparative advantage, as was agreed to in the February 2026 joint statement between Prime Minister Narendra Modi and U.S. President Donald Trump.

Separately, Commerce Secretary Rajesh Agrawal confirmed that a two-man team from the U.S. visited India earlier this month during which substantial progress was made towards finalising the text of the deal.

“Talks between India and the U.S. are ongoing and the U.S. has assured us of a comparative advantage over our competitor countries,” the senior official said on the condition of anonymity as the details of the bilateral discussions have not yet been made public.

This is a significant development because Indian officials, including Commerce Minister Piyush Goyal, have repeatedly said that India would move ahead with a deal with the U.S. only if it is assured of a comparative advantage over its competitors.

The February joint statement stated that the U.S. and India “commit to provide each other preferential market access in sectors of respective interest on a sustained basis”.

However, since then, the U.S. has imposed additional 10% ‘forced labour’ tariffs on India, the same as on some of its competitors such as Indonesia, Malaysia, Pakistan, and Sri Lanka. Further, the U.S. is currently conducting another investigation into India and several other countries related to excess capacity, which could see additional tariffs being levied.

The official, however, said that the U.S. assurance of comparative advantage for India takes into account this future tariff.

“The attempt by both sides is to complete the deal by the end of this financial year,” the official added. “We have also agreed to a clause that says that if either country changes its tariffs on the other country, then the second country can also modify its commitments under the deal. This was also a part of the February joint statement.”

The official said that such a clause is “not usual” in trade deals that India enters into, but that it had specifically been included in the deal with the U.S.

Separately, Mr. Agrawal said that the talks between the two sides were “on the right track” and that the teams are engaged both in-person and virtually.

“There was a small team from the U.S. that visited India for discussions on customs and trade facilitation in the first week of November,” he said. “The discussions went off in a very positive direction. A lot of issues were closed, and there was convergence in a lot of areas.”

In addition, he said that the chief negotiators of both sides regularly speak with each other virtually to carry forward the discussions and “iron out some of the language issues or some of the small fixes that remain in the agreement”.

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