Vice President JD Vance has announced that the United States and India have officially finalised the terms of reference for trade negotiations, marking a significant step toward a comprehensive bilateral trade agreement. This development comes amid ongoing efforts to address trade imbalances and strengthen economic ties between the two nations, as the Trump administration's 90-day suspension of increased tariffs approaches its July deadline.

Vance's Announcement And Meeting With Prime Minister Modi

During a speech in Jaipur on Tuesday, April 22, 2025, Vice President JD Vance confirmed that both countries have established a formal framework for trade negotiations. "Our governments are hard at work on trade agreements, and we've already finalised the terms of reference for a deal," Vance stated during his address. This announcement came just one day after his meeting with Prime Minister Narendra Modi in New Delhi, where both leaders assessed progress on various aspects of bilateral cooperation.

The meeting between Modi and Vance on Monday evening resulted in a joint acknowledgment of the "significant progress in the negotiations for a mutually beneficial India-U.S.

Bilateral Trade Agreement". Modi's office released a statement indicating that the two leaders evaluated advancements in bilateral collaboration and recognised ongoing efforts to strengthen cooperation in energy, defence, and strategic technologies.

Following their discussions, Modi hosted Vance and his family for dinner at his official residence, where the Indian Prime Minister expressed on social media his commitment to fostering mutually advantageous collaboration across various sectors, including trade, technology, defence, energy, and cultural exchanges.

The Personal Dimension of Vance's Visit

Vice President Vance's four-day trip to India carries both diplomatic and personal significance. He is accompanied by his wife Usha, who is of Indian heritage, and their three children. The family's arrival garnered significant attention in Indian media, with images of their children dressed in traditional Indian attire—the boys in kurta-pyjamas and their three-year-old daughter in a lehenga—widely circulated.

While the visit includes official engagements, it is described as "primarily personal" with family activities such as touring historical sites. After meeting with Modi, the family travelled to Jaipur, where they visited the historic Amer Fort. This personal connection adds a cultural dimension to the diplomatic engagement between the two nations.

The Framework For Trade Negotiations

The finalisation of terms of reference represents a critical foundation for the broader trade negotiations between India and the United States. U.S. Trade Representative Jamieson Greer confirmed this development, stating, "I am pleased to confirm that USTR and India's Ministry of Commerce and Industry have finalised the Terms of Reference to lay down a roadmap for the negotiations on reciprocal trade".

During his speech in Jaipur, Vance emphasised that this step is vital toward realising the vision articulated by President Trump and Prime Minister Modi in February 2025, when they announced an ambitious goal to more than double bilateral trade between the countries to $500 billion by 2030. The current bilateral trade stands at approximately $129 billion (2024), with India maintaining a $45.7 billion surplus with the United States.

Vance characterised the terms of reference as setting "a roadmap towards a final deal between our nations," underscoring the methodical approach being taken to address complex trade issues. He outlined the Trump administration's approach to trade partnerships, stating they seek partners "on the basis of fairness and of shared national interests" who "respect their workers" and are "committed to working with America to build things".

Addressing Trade Imbalances

A central theme in the trade discussions is addressing what American officials describe as imbalances in the bilateral economic relationship. Ambassador Greer noted that "there is a serious lack of reciprocity in the trade relationship with India". This echoes President Trump's previous characterisations of India as a "tariff king" and a "significant abuser" of trade relations.

In his Jaipur address, Vance specifically urged India to reduce non-tariff barriers to facilitate greater market access for American companies. "India should consider dropping some of the non-tariff barriers for American access to the Indian market," he stated, identifying this as a necessary step toward concluding a comprehensive trade agreement.

The negotiations are taking place under the shadow of potential U.S. tariffs. India is among several nations engaged in trade talks with the United States during a 90-day suspension of increased tariffs announced by President Trump on April 9, which concludes on July 9. Prior to this pause, India was poised to face a 27% tariff from the U.S.. Reports indicate that India has already reduced tariffs on several products and is considering broader cuts to address American concerns. Indian officials are reportedly willing to lower tariffs on more than half of imports from the United States, which amounted to $41.3 billion in 2024.

Expanding Cooperation Beyond Trade

While trade negotiations remain a central focus, Vance outlined several additional areas for deepened cooperation between the United States and India during his Jaipur speech.

Defence Collaboration

Vance confirmed that both countries would expand joint production and military cooperation. "India and the U.S. will co-produce many defence equipment items," he stated, adding, "We want India to buy more of our military equipment". This builds on plans established earlier this year for India and the U.S. to create a framework for defence cooperation, with New Delhi aiming to acquire and co-manufacture weapons such as Javelin anti-tank missiles and Stryker infantry combat vehicles.

The Vice President emphasised shared strategic concerns, particularly regarding security in the Indo-Pacific region. "India and the U.S. both know the region must remain safe from any hostile powers," Vance noted, highlighting the importance of strengthening defence ties to secure that goal.

Energy And Resource Partnership

Energy cooperation emerged as another significant area of potential collaboration. Vance indicated that the Trump administration recognises the importance of affordable and reliable energy and wants to expand exports to India. "This administration recognises cheap dependable energy — we want to sell it to India," he stated.

The Vice President also expressed America's interest in helping India explore offshore natural gas reserves and secure access to critical mineral supplies essential for clean energy technologies. Additionally, Vance welcomed India's budget amendment of nuclear liability laws, suggesting that "America's energy can help realise India's nuclear goals".

Strategic Context And Future Outlook

Vance's visit and the progress in trade negotiations occur against a backdrop of evolving global strategic dynamics. Experts note that the timing of Vance's trip is crucial amid ongoing trade negotiations and escalating U.S.-China tensions. Harsh Pant, head of foreign policy at the Observer Research Foundation think tank in Delhi, observed that "Vance's prominent role in American diplomacy adds significant importance to this visit".

The Vice President's trip is also viewed as a precursor to President Trump's anticipated visit to India later this year for a summit involving the Quad leaders from India, Australia, Japan, and the United States. Modi expressed anticipation for Trump's visit during his meeting with Vance.

Challenges And Contentious Areas

Despite the positive momentum, several contentious areas remain in the trade negotiations. Agriculture is one such sector, where the U.S. seeks increased access, but India staunchly defends its policies. Trump has expressed a desire for India to purchase U.S. corn, but significant barriers persist.

The negotiations also face the challenge of addressing long-standing issues while meeting a relatively tight timeline imposed by the July 9 deadline when the suspension of increased tariffs expires. Both Delhi and Washington have been striving for a swift resolution to the ongoing trade discussions since the announcement of the tariff pause.

Conclusion

The finalisation of terms of reference for trade negotiations between the United States and India represents a meaningful step toward addressing trade imbalances and strengthening economic ties between the world's largest and fifth-largest economies. Vice President Vance's announcement during his visit to India underscores the Trump administration's prioritisation of this relationship amid broader strategic considerations.

As negotiations proceed under this newly established framework, both countries face the task of navigating complex issues ranging from tariff reductions and market access to defence cooperation and energy partnerships. The outcome of these discussions will have significant implications not only for bilateral trade but also for the broader strategic partnership between the United States and India in an increasingly complex global landscape.

Agencies