India and US Free Trade Agreement: Opportunities and Challenges

India and the United States are two of the largest economies in the world, and both countries have been exploring ways to deepen their economic ties through a free trade agreement. The idea of a US-India FTA has been under discussion for years, with negotiations starting back in 2007. However, the talks have been on hold since 2013 due to disagreements over issues such as intellectual property rights, data localization, and market access.

With the change in administration in the US and the growing importance of the Indo-Pacific region, there has been renewed interest in rekindling the negotiations for the US-India FTA. A comprehensive trade deal between the two countries has the potential to create new opportunities for businesses, boost economic growth, and strengthen strategic ties.

Opportunities for Businesses

A US-India FTA would eliminate tariffs and other barriers to trade, making it easier and cheaper for businesses in both countries to buy and sell goods and services. This would create new opportunities for exporters, particularly small and medium-sized enterprises (SMEs) that often face high entry costs and regulatory hurdles in foreign markets.

For instance, US companies that specialize in technology, healthcare, and defense could benefit from accessing the Indian market, which is home to over 1.3 billion people and a rapidly growing middle class. On the other hand, Indian businesses could tap into the US market, which is the world`s largest consumer market and a leading source of innovation, capital, and talent.

Moreover, a US-India FTA could facilitate greater investment flows between the two countries, as it would provide greater certainty and predictability for investors. This would help attract more foreign capital to India, which needs significant infrastructure investments to support its economic growth, and also enable Indian companies to invest more in the US, which is a preferred destination for Indian tech startups and IT services firms.

Challenges to Overcome

However, negotiating a US-India FTA is not without its challenges. One of the key sticking points is intellectual property rights (IPR), as the US is seeking stronger protection for its patents, trademarks, and copyrights in India. This has been a contentious issue in the past, as India has been accused of violating US IPR by allowing generic drug makers to produce and sell cheaper versions of patented drugs.

Another challenge is data localization, which refers to the requirement that companies store and process data within the country`s borders. India has imposed strict data localization rules for certain types of data, such as financial data and personal data, which has been a concern for US tech companies that operate in India. The US has argued that such rules hinder digital trade and innovation, and has pushed for more flexible rules on data flows.

Finally, there are also issues related to market access, particularly in areas such as agriculture, dairy, and automobiles. India has been reluctant to open up its agricultural sector, which is highly protected, to US imports, while the US has raised concerns over India`s tariff and non-tariff barriers on dairy products and automobiles.


A US-India FTA would be a significant development in the bilateral economic relationship, but achieving a comprehensive and balanced trade deal will require both countries to address the outstanding issues and make difficult compromises. With the Biden administration`s focus on rebuilding alliances and engaging with Asia, and India`s ambitious economic reform agenda, there may be a renewed impetus to restart the talks and move towards a mutually beneficial agreement.