US Secretary of State Marco Rubio expressed confidence that a "beneficial and sustainable" trade agreement between the US and India is imminent, following wide-ranging talks with Indian External Affairs Minister S Jaishankar. Rubio, on a four-day visit to India, emphasized that this deal would be enduring and address both nations' interests, stating that the overall bilateral ties are set to strengthen significantly by the end of the current US administration. The discussions covered boosting cooperation in trade, critical minerals, energy, and defense, with Rubio also mentioning India's participation in the US-backed 'Pax Silica' initiative aimed at building secure supply chains for critical minerals and AI.
This push for a trade deal comes amidst potential challenges, particularly regarding generic drug tariffs. US President Donald Trump announced that imported generic medicines would face a 100% tariff from August 2028, potentially rising to 200% a year later, unless manufacturers shift production to the United States. This policy, stemming from a national security investigation launched in April 2025 under Section 232 of the Trade Expansion Act, could significantly impact India, which supplies nearly 50% of all generic medicines consumed in America. India's pharmaceutical exports to the US were valued at $10.5 billion during the 2024-25 financial year, making the sector one of India's three largest exports to the US.
Despite the proposed tariff threat, there is an existing understanding that India would "receive negotiated outcomes with respect to generic pharmaceuticals and ingredients," as per a trade agreement reached in February. While an interim deal earlier this year led to reduced tariffs on Indian goods, including a cut from 50% to 18% after a 10-month impasse, the final text of a broader bilateral deal is still being negotiated. India's exports to the US remained stable at $87.3 billion in the year ending March 2026, even with tariffs, and the US goods trade deficit with India was $58.2 billion in 2025, a 27.1% increase from 2024.
The improvement in ties is also highlighted by Rubio's invitation to Indian Prime Minister Narendra Modi to visit the White House. This visit aims to deepen trade and defense cooperation and accelerate collaboration on critical and emerging technologies. Earlier reductions in reciprocal tariffs were met with relief in Delhi, with India committing to buy more American goods, including energy, aircraft, technology, and agricultural products, totaling $500 billion, although trade experts express circumspection about this figure given current trade volumes. While Trump has expressed a desire for India to eliminate all tariff and non-tariff barriers, sectors like agriculture and dairy may remain protected even after a final agreement.
