India and the United States appear to be moving closer to a trade agreement, with Commerce Minister Piyush Goyal saying that almost all discussions for the first phase of the proposed Bilateral Trade Agreement (BTA) have been completed.
As negotiations enter the final stage, one issue attracting attention is India’s effort to secure protection from possible US tariffs under Section 301 of the US Trade Act, 1974. Reports suggest that a successful interim trade deal could help India avoid additional duties that may otherwise be imposed by Washington.
Speaking on Monday, Goyal said that The remarks come as officials from both sides continue negotiations on the proposed trade pact.
A delegation led by Assistant US Trade Representative for South and Central Asia Brendan Lynch arrived in New Delhi for a four-day visit beginning June 1. During the meetings, officials are expected to finalise details of an interim agreement while also advancing discussions on the broader Bilateral Trade Agreement.
The proposed pact is expected to cover market access, customs procedures, non-tariff barriers, investment promotion, supply-chain cooperation and economic security.
Section 301 of the US Trade Act, 1974 is a trade enforcement tool used by the United States to address what it considers unfair trade practices by other countries.
The provision gives the Office of the United States Trade Representative (USTR) the authority to investigate foreign governments and take retaliatory action if their policies are seen as harming American businesses or trade interests.
In many cases, the US responds by imposing tariffs on goods imported from the country under investigation.
The USTR can launch a Section 301 investigation if it believes a country’s trade policies violate international agreements or unfairly disadvantage American businesses.
Such investigations can be triggered by concerns over intellectual property theft, forced technology transfers, labour rights violations, restrictions that limit access to foreign markets, or large government subsidies that lead to excess production.
If the investigation concludes that unfair trade practices exist, the US government can respond by imposing additional tariffs or taking other trade-related actions against the country concerned.
In March this year, the United States launched Section 301 investigations involving several trading partners, including India, China, Japan and the European Union.
The investigations focus on concerns such as manufacturing overcapacity and allegations of forced labour in global supply chains.
The move gained attention after the US Supreme Court struck down reciprocal tariffs imposed under the International Emergency Economic Powers Act (IEEPA). Following that ruling, the White House began using Section 301 investigations as another route for examining trade practices and potentially imposing tariffs.
According to a report by Business Standard, the US is likely to assure India that no additional tariffs under Section 301 will be imposed if the two countries conclude an interim trade deal before July 24.
That date is important because it marks the end of the current 10% baseline tariff that has been temporarily applied to trading partners during a 90-day period.
People familiar with the discussions have indicated that even if India were later found to be in violation under a Section 301 investigation, additional tariffs may not be imposed once the trade deal is in place. Instead, tariff rates would remain at the levels negotiated under the agreement.
Countries without such agreements could face significantly higher duties if they are found to have violated Section 301 provisions.
The American delegation is scheduled to hold talks with Indian officials until June 4. The discussions are expected to focus on finalising the interim agreement and preparing the ground for a wider trade pact.
With both countries looking to strengthen economic ties and reduce trade disputes, the coming weeks could prove crucial for the future of India-US trade relations.