Two senior diplomats said India indicated late on Friday it could accept a two-year extension of the moratorium, which covers digital downloads and streaming services and is set to expire this month.

The move follows earlier remarks by Commerce Minister Piyush Goyal calling for a “careful reconsideration” of the long-standing arrangement.

Despite the apparent flexibility, gaps between New Delhi and Washington remain significant. The United States has pushed for a permanent extension, with U.S. Trade Representative Jamieson Greer stating Washington is not interested in a temporary renewal.

Diplomatic sources said negotiations were ongoing, with some members exploring a compromise that would extend the moratorium beyond the next ministerial conference, potentially for five to ten years. It remains unclear whether either side would accept such a proposal.

Business groups have warned that failure to extend the moratorium could introduce uncertainty into cross-border digital trade, raising the possibility of new duties on electronic transmissions.For nearly three decades, WTO members have routinely renewed the measure at successive ministerial meetings.

The current debate comes amid wider strains on the global trading system following tariff disputes and disruptions linked to geopolitical tensions affecting shipping, energy prices and supply chains.

The outcome of talks in Yaounde is being closely watched as a gauge of the WTO’s ability to deliver consensus at a time of deep divisions among major economies.

Norwegian Foreign Minister Espen Barth Eide said extending the moratorium for a meaningful period would be significant for some countries and demonstrate that ministers can reach concrete outcomes.

The tariff cut applies immediately to premium European vehicles that were previously subject to import duties as high as 110 percent. By lowering these levies, India is offering a major incentive to global luxury carmakers such as BMW, Mercedes-Benz, and other European brands seeking to expand their footprint in the fast-growing Indian market.

India is currently the world’s third-largest car market by volume, trailing only the United States and China. Despite its size, the country has long maintained high barriers to protect domestic manufacturers, making imported cars prohibitively expensive and limiting consumer choice in the luxury segment.

Under the new trade arrangement, the steepest tariff reductions will apply to cars priced above 35,000 euros. Vehicles in this category will now face a flat 30 percent duty, significantly improving their competitiveness and allowing automakers to introduce a wider range of models into India.

Cars priced between 15,000 euros and 35,000 euros will see import duties reduced to 35 percent. Annual import caps have been placed across different price brackets, with a total quota initially set at 100,000 units per year to manage the pace of market opening.

According to officials, these import quotas will gradually increase over time, reaching up to 160,000 units annually over the next decade. This phased approach is designed to balance foreign competition with the interests of India’s domestic auto industry.

The trade deal comes at a time when governments across the world are re-evaluating trade relationships amid shifting global economic conditions. For India and the EU, the agreement represents a strategic effort to strengthen supply chains, enhance market access, and reduce reliance on uncertain external trade policies.

Although the tariff cuts are substantial, industry executives caution that consumers may not see immediate price reductions. Instead, automakers are expected to use the lower duties to expand product portfolios, introduce newer technologies, and test demand for higher-end models.

Luxury cars currently account for less than one percent of total passenger vehicle sales in India. However, rising incomes and a growing appetite for premium goods suggest strong long-term potential for the segment, particularly in major urban centers.

European manufacturers beyond the luxury segment are also expected to benefit. Companies such as Volkswagen, Renault, and Stellantis see the agreement as an opportunity to strengthen technology transfer, deepen local partnerships, and integrate Indian operations more closely into global supply chains.

Electric vehicles have also been included in the deal, though with a delayed timeline. India has agreed to cut import duties on European-made electric cars priced above 20,000 euros to between 30 and 35 percent, but only after five years.

This delay is intended to protect domestic electric vehicle manufacturers, who are still building scale and infrastructure. Over time, EV tariffs are expected to fall further, eventually reaching 10 percent, with annual import quotas expanding significantly.

Overall, the tariff cuts signal a clear shift in India’s trade and industrial strategy. By selectively opening its market, India aims to attract investment, encourage competition, and offer consumers greater choice while still safeguarding domestic manufacturing growth.

The safeguard duty, structured over a three-year period, reflects India’s intent to ensure fair competition and protect local producers from the impact of low-priced imports, particularly from overseas markets.

Under the new framework, a 12 percent tariff will apply in the first year, followed by 11.5 percent in the second year and 11 percent in the third, offering predictability and confidence to domestic steel companies.

Market participants responded positively, with leading steel stocks posting notable gains as investors welcomed the clarity and longer policy horizon provided by the government’s decision.

The tariff structure is expected to improve price realization for Indian steelmakers, allowing them to operate with healthier margins while maintaining competitiveness in both domestic and export markets.

Analysts noted that domestic steel prices are currently trading at a meaningful discount to the landed cost of imports, creating room for gradual price adjustments without disrupting demand.

This environment supports sustainable profitability for producers while ensuring that downstream industries continue to receive stable supplies at competitive prices.

The decision follows detailed assessments by trade authorities, which identified a sharp rise in imports that posed challenges for domestic manufacturers, particularly in segments sensitive to pricing pressures.

By extending protection over three years, the government has addressed earlier concerns linked to short-term measures, offering a more stable outlook for capital investment and capacity planning.

Steel companies are now better positioned to plan modernization, efficiency upgrades, and expansion projects, strengthening India’s industrial base and employment potential.

The broader metals sector also benefited from the announcement, reflecting optimism around policy support, firm global metal prices, and improving domestic demand conditions.

Strong performance across steel stocks underscores investor confidence in India’s infrastructure and manufacturing growth story, where steel remains a core input for development.

The safeguard duty aligns with India’s broader economic strategy of promoting self-reliance, enhancing domestic value chains, and reducing vulnerability to volatile global trade flows.

For the equity markets, the move reinforces policy continuity and responsiveness, key factors that attract long-term institutional investment into core industrial sectors.

As India continues to balance trade openness with strategic safeguards, the steel tariff decision stands out as a calibrated step that supports domestic industry while maintaining market stability.

This improvement reflects a combination of resilient exports, disciplined import management, and growing engagement with key global partners.

Official data indicated that the trade deficit declined sharply, outperforming market expectations and signaling stabilisation in external balances.

Lower imports of gold, crude oil, and coal played a significant role in easing pressure on the trade account. At the same time, India’s export performance showed encouraging signs, particularly in shipments to the United States.

Exports to the US rebounded strongly, reflecting sustained demand for Indian goods despite global trade headwinds. Commerce officials highlighted that Indian exporters have held their ground even amid tariff-related challenges.

This resilience underscores the competitiveness of Indian manufacturing and services in global markets. Overall merchandise exports rose noticeably in November compared to the previous month.

Imports declined substantially, reflecting both softer commodity prices and strategic moderation in non-essential purchases. The narrowing trade gap offers relief to policymakers navigating a complex global economic environment.

It also strengthens India’s macroeconomic fundamentals by reducing pressure on foreign exchange reserves. Government representatives confirmed that India and the United States are close to finalising a framework trade agreement.

Such an agreement is expected to lay the foundation for deeper economic cooperation between the two economies. Ongoing discussions focus on reducing reciprocal tariffs and addressing long-standing trade frictions.

Officials expressed optimism that constructive engagement could lead to an early conclusion of talks. Recent high-level meetings between Indian and US trade officials have reinforced momentum toward consensus.

These interactions signal a shared commitment to enhancing bilateral trade flows. The rebound in exports to the US follows a brief dip in earlier months.

November data showed strong month-on-month and year-on-year growth in shipments to America. The US continues to remain India’s largest single export destination.

This relationship is central to India’s broader trade diversification strategy. Domestic policy measures have also supported export performance during a challenging global phase.

Tax relief, labour reforms, and targeted export incentives have helped businesses remain competitive. The government has aimed to cushion exporters from external shocks while boosting productivity.

These steps are increasingly reflected in improved trade outcomes. Services trade continues to be a major strength for the Indian economy.

Preliminary estimates suggest a robust surplus in services trade for November. This surplus provides an important counterbalance to the merchandise trade deficit.

Sectors such as IT services, business process outsourcing, and professional services remain key drivers. Strong services exports enhance India’s position as a global knowledge and technology hub.

Together, merchandise and services trade trends point toward a more balanced external sector. India’s engagement with the US is also part of a broader strategy to strengthen global partnerships.

Trade discussions include market access, regulatory cooperation, and supply chain resilience. Both sides are exploring ways to unlock mutual benefits while respecting domestic priorities.

Improved trade relations could encourage higher investment flows and technology collaboration. Market observers note that a stable trade outlook supports investor confidence.

A narrowing deficit also provides greater policy space for growth-oriented initiatives. As global economic conditions remain uncertain, India’s recent trade performance offers reassurance.

Sustained export growth and controlled imports reflect prudent economic management. The focus ahead will be on maintaining momentum while expanding into new markets.

With constructive diplomacy and domestic reforms aligned, India’s trade trajectory appears increasingly positive.