US assures India of tariff edge over competitors in trade pact

New Delhi: The US has assured India of a comparative tariff advantage over its competitors in the trade deal, said an official Friday, adding that efforts are on towards closing the first tranche of the trade pact by the end of this financial year. Services-related issues will be part of the second tranche, the official added.

Negotiations are continuing on both the first tranche of the agreement, and the wider bilateral trade agreement (BTA). The two countries had announced a framework for an interim trade agreement in February 2026. However, the final tariff structure remains linked to the outcome of Washington's second investigation under Section 301. The second probe, launched by the Office of the US Trade Representative (USTR) in March 2026, covers 60 economies, including India, and examines whether countries have effectively prohibited imports of goods produced using forced labour.

"We will have to see how the tariff framework unfolds. We are working towards closing the first tranche by the end of this financial year. Talks are going for the first tranche and the broader BTA," the official said. A team of officials from the US visited India in early November to discuss issues around customs and trade facilitation.

"India-US trade talks are on the right track...We look forward to a successful conclusion soon," said commerce secretary Rajesh Agrawal, adding that there was a lot of convergence in many areas during the recent visit of the US team, with good progress and the chief negotiators of the two sides have been engaging virtually on the "language and small fixes."

The pact, as per the official, is not a regular trade agreement with various chapters. Instead, it is a legal text with annexures and chapters on customs and trade facilitation. The US remained the top export destination for India in the first seven months of the fiscal year with outbound shipments at $59.52 billion as against $52 billion in April-October FY26.

Scotch imports

Agrawal said that New Delhi will honour duty concessions on Scotch whiskey offered as part of its trade deal with London, but the UK would also have to respect where no concessions have been granted. "We have given concessions very clearly on Scotch whiskey. That concession which we have given will be respected. And things which fall under where concessions have not been given, that is something that the other side has to respect. So, we are very hopeful it will be resolved in the next few days. There is nothing much to worry," Agrawal said, citing the classification remaining among the "key concerns."

Allaying concerns on the issue, he said the finance ministry has engaged with stakeholders on the issue of bulk Scotch whiskey imports from the UK. "There are certain technical issues which are involved in the import of Scotch whiskey. Department of Revenue is very closely engaged with the stakeholders, and they are trying to resolve it," Agrawal said, explaining that this was largely a classification issue as the duties in three potential lines where that scotch can come in are very different.

"The concessions are also very different in these three concession lines, and the historical behaviour of industry under these three lines have also been varying in the past, and that is creating a bit of a confusion. But I am sure it will be resolved very soon," he said. His comments come amid a dispute over containers of bulk Scotch held at Indian ports, with customs investigators seeking a 150% import duty despite the trade pact providing for a reduced 75% rate. The dispute has raised concerns over the implementation of the India-UK trade deal, which came into effect in July.