'A vital step': JD Vance announces breakthrough in Modi meet as US-India finalise trade negotiation terms

US Vice President JD Vance, addressing a gathering in Jaipur today, said he and Prime Minister Narendra Modi made good progress on tariff talks, and that the US and India have "officially finalised the terms of reference for the trade negotiation".

Vance said both governments are hard at work on a trade agreement built on "shared priorities", like creating new jobs, building durable supply chains, and achieving prosperity for the workers of respective countries.

"In our meeting yesterday, Prime Minister Modi and I made good progress on all of those points, and we are especially excited to formally announce that America and India have officially finalised the terms of reference for the trade negotiation. I think this is a vital step," Vance said, while addressing the gathering.

The US Vice President's comments echo Finance Minister Nirmala Sitharaman's statement in the US on Monday, where she said India is "actively" engaging with the US on a bilateral trade agreement and "positively", the "first tranche of the pact" between the two countries is expected to conclude this year. The U.S. plans to increase the 10% tariffs on Indian exports to 26% if no trade deal is struck by the end of the 90-day pause Trump put in place earlier this month. However, both countries are hopeful of striking a trade deal before the deadline.

PM Modi’s meeting with the US President in Washington on February 13 had ended with the leaders setting a $500-billion annual bilateral trade target to be achieved in the next five years.

Speaking about target set by both the leaders, Vance said the latest breakthrough is a vital step toward realising President Trump's and Prime Minister Modi's vision, because it sets a roadmap towards a final deal.

Talking about the areas of collaboration for both countries, Vance said both governments have two key priorities -- to protect their nations and build great things.

"On defence, our countries already enjoy a close relationship, one of the closest relationships in the world. America does more military exercises with India than we do with any other nation on Earth," he said.

Both Modi and Trump in February had set out a broad plan to achieve the target through an initiative called the ‘U.S.-India COMPACT (Catalysing Opportunities for Military Partnership, Accelerated Commerce & Technology) for the 21st Century’ to drive change across key pillars of cooperation: defence, energy security, technology and innovation, trade and investment, etc.

Vance, in his address, agreed that the U.S.-India COMPACT announced in February will lay the foundation for even closer collaboration between the countries.

"From javelins to striker combat vehicles, our nations will co-produce many of the munitions and equipment that we'll need to deter foreign aggressors, not because we seek war but because we seek peace and we believe the best path to peace is through mutual strength," he adds.

He also said the launching of the joint autonomous systems industry alliance will enable America and India to develop the most state-of-the-art maritime systems. "It's fitting that India, this year, is hosting the Quad Leaders' Summit. Our interests in a free, open, peaceful, and prosperous Indo-Pacific are in full alignment. Both of us know that the region must remain safe from any hostile powers that seek to dominate it."