1. India–U.S. Bilateral Trade Agreement (BTA): First Tranche

Background India and United States are close to finalising the first tranche of a long-term Bilateral Trade Agreement (BTA), marking a significant step in economic and strategic convergence. Key Highlights • A joint statement on the first tranche is expected shortly. • The U.S. will reduce tariffs on Indian exports from nearly 50% to ~18% through an executive order. • India will cut tariffs on U.S. imports only after signing a legally binding agreement, expected by mid-March 2026. • India committed to $500 billion imports from the U.S. over five years, driven by: o Energy security o Civil aviation expansion o High-end technology needs • Aircraft, engines and aviation spares alone may account for over $100 billion. Value Addition • U.S. tariff reductions are executive actions, reversible in nature. • Indian tariffs are MFN-based and governed by WTO obligations, requiring legal ratification. • The agreement aids trade diversification, reducing overdependence on any single market (e.g., China/EU). Key Definition • Most Favoured Nation (MFN) Tariff: A non-discriminatory tariff rate applied equally to all WTO members. Constitutional & Legal Provisions • Article 246: Parliament’s legislative competence over foreign trade. • GATT (WTO): Framework governing tariff commitments. Conclusion The BTA reflects strategic-economic alignment, blending market access with geopolitical trust. UPSC Relevance • GS-2: International relations, trade diplomacy• GS-3: External trade, economic growth.