United States President Donald Trump stated that India had proposed a trade deal offering almost "no tariffs" on US goods, aiming to avoid higher import and export costs. This claim was disputed by India. New Delhi is pursuing a trade deal with the US within a 90-day pause on reciprocal tariffs, announced on April 9. On May 8, the White House finalized a trade agreement with the United Kingdom, shortly after India concluded a similar agreement. Trump's comments led to a jump in India's equity benchmarks, with the Nifty 50 and BSE Sensex reaching seven-month highs.

India initiated trade negotiations with the US after Prime Minister Narendra Modi's visit to the White House in February, with both countries aiming to finalize a bilateral deal this year. US Vice President JD Vance also visited India, noting "very good progress" on a trade agreement. During a meeting in Doha, Trump remarked on the difficulty of selling in India, stating India was offering a deal with virtually no tariffs. India's Foreign Minister Subrahmanyam Jaishankar countered Trump's claim, emphasizing that nothing is decided until an agreement is reached, highlighting the need for a mutually beneficial outcome.

The US is India’s largest trading partner, with bilateral trade totaling $129 billion in 2024. India had a $45.7 billion surplus with the US, mainly in pharmaceuticals, electrical machinery, and jewelry. Trump has long criticized India’s high tariffs, threatening reciprocal tariffs of 27 percent, which are currently on hold until early July. A 10 percent base tariff remains for India and other nations during this pause. India’s average tariff rate is 17 percent, compared to the US's 3.3 percent.

Recently, India has reduced import duties on US goods like bourbon whiskey and Harley-Davidson motorcycles. New Delhi has also proposed zero tariffs on car parts on a reciprocal basis, up to a certain amount. An Indian delegation is scheduled to visit the US to advance trade talks, potentially including Trade Minister Piyush Goyal. These developments followed India's threat of retaliatory tariffs related to higher US duties on steel and aluminum, indicating a more assertive approach in negotiations.

Reuters reported that India has offered to reduce duties to zero on 60 percent of US imports in the first phase of a deal, along with preferential access to nearly 90 percent of merchandise imports from the US. This could reduce the average tariff differential between India and the US by 9 percentage points. Preferential market access is considered for goods like jewelry, textiles, and agricultural products. India has also offered to ease export regulations on high-value US imports, including aircraft, electric vehicles, medical devices, and hydrocarbons.

India has requested the US to grant it the same status as top allies like the UK and Japan in access to critical technology sectors, including artificial intelligence, biotech, and semiconductors. The possibility of India being exempt from tariffs contrasts with the US-UK deal, which only removed tariffs on specific goods. US Treasury Secretary Scott Bessent suggested potential purchase agreements for specific products with China, indicating that Trump’s tariff strategy involves carve-outs rather than broad free trade agreements. India has traditionally used tariffs to protect its agricultural markets, facing farmer concerns about weakening these protections. Geopolitically, India balances its relationship with the US and its significant imports from China, while China has warned against aligning with the US in trade deals. India recently signed a trade pact with the UK, reducing duties on many goods.