Historic First Phase Of India-US Trade Deal Sets Stage For FTA: Former Envoy

Former US Ambassador to India Kenneth I. Juster on Tuesday described the newly announced India-US trade understanding as "historic", saying it marks the first agreement of this magnitude between New Delhi and Washington and lays the foundation for a future free trade agreement.

Speaking exclusively to NDTV's Senior Executive Editor Aditya Raj Kaul, Juster said he felt "gratified" after decades of engagement with India-US economic ties. "This is really the first phase of what both leaders have said would hopefully be a free trade agreement," he noted, adding that while the pact still needs to be reduced to writing and fine details ironed out, the political decision by the two leaders to move forward was the critical breakthrough.

He underlined that, unlike several earlier trade announcements by Washington with other partners, this understanding contains "substantive provisions that have been negotiated between the two sides" and therefore has "real content and meat to it."

Juster also addressed the sensitive question of India's purchases of Russian oil, after US President Donald Trump said Prime Minister Narendra Modi had agreed to reduce such imports to "nil". The former envoy said he was not privy to the operational details but pointed out that India had already been lowering Russian oil purchases in recent months due to market conditions. He called this a "positive development" that could also contribute to momentum for a peace settlement in the Russia-Ukraine conflict.

On the trade front, the removal of 25% punitive tariffs and the reduction of reciprocal tariffs from 25% to 18% were, in his view, major confidence-building steps. More importantly, he argued, the deal resolves a long-standing irritant in the relationship. "The strategic partnership stretches across defence, technology, energy, space and many other areas. Trade has always lagged behind and been a sore subject. This now helps resolve the tensions on that issue and should provide even further impetus to the strategic partnership," he said.

Juster linked the breakthrough to wider geopolitical coordination, including the potential to energise the Quad grouping of India, the United States, Japan and Australia, especially if India hosts a leaders' summit later this year that could see President Trump visit New Delhi.

On the China angle, Juster noted that India now enjoys one of the lowest tariff levels in Asia at 18% following the announcement. He suggested that as negotiations progress toward a full FTA, tariffs could be reduced further. "I actually think it is in India's interest to open up its economy. It has world-class companies and will be further integrated into global supply chains. It's a win-win for both countries," he said, while acknowledging that sensitive sectors such as agriculture and dairy would require careful handling in future rounds.

Asked about recent diplomatic activity in New Delhi, including the presence of the US Ambassador and reports of high-level engagements, Juster said that while he was not aware of the specifics, "having a US ambassador on the ground with a direct line to the President can only be positive" for advancing such complex negotiations.

For Juster, the announcement is less an endpoint and more a beginning - the first concrete step toward a comprehensive India-US free trade agreement long seen as the missing pillar of an otherwise deep strategic partnership.