NITI Aayog recommends digital trade boost with US

NITI Aayog has advised the Indian government to engage in a dedicated services-focused trade agreement with the United States in its most recent Trade Watch quarterly, as a strategic opportunity to grow India's presence in the world's largest services market in digital, IT and professional services. 

The report comes at a time when India is experiencing an increasing trade deficit in goods, and with services exports—especially tech, business, and financial services—helping stabilize trade. In the first quarter of FY25, India's services exports grew over 10%, resulting in a $52.3 billion surplus that better positioned India against the growing merchandise trade gap.

Why's the focus on services?

NITI Aayog said it is time for India to build off the success of its UK negotiations to replicate a similar service first negotiation with the United States, while encouraging the federal government to focus the trade agreement on;

• Digital trade provisions for cross-border data flows
• Visa flexibility for skilled professionals (e.g. H-1B, L-1 categories)
• Recognition of professional qualifications in areas such as healthcare, architecture and engineering
• Collaborative regulation on data governance, IP, and licensing arrangements
• Access to markets in high growth sectors such as telecommunication, AI, edtech, cybersecurity, and cloud

"The world is in a digital transformation and Indian firms are ideally positioned to service this demand, provided that regulatory and market barriers are removed.," the report states.

Actionable strategic footing in digital and AI domains

As the U.S. re-evaluates its supply chains and is increasingly looking to reliable digital partners, India has an opportunity to position itself as a trusted service hub and source of emerging technologies. Indian enterprises are rapidly deploying their service businesses in AI deployment, cloud transformation, cybersecurity solutions and telecom consulting:

Each of these areas represent workable market access commitments in the report.

India is presently the fourth largest exporter of digitally delivered services in the world and it is closing in on dynamic pivot, where it will be services rather than goods that will fuel the next phase of export-led growth.

Visa, data and domestic simplification are key enablers

The mobility dimension is an issue of greatest concern in the report. While India's unlimited supply of talent is indisputable, unilateral visa restrictions, along with no mutual recognition of educational credentials, remain barriers to service provision. NITI Aayog has made strong recommendations to procure liberal visa negotiations for intra-corporate transfert and/or independent service providers.

The report also identifies regulatory fragmentation, remains a barrier from IP disputes to onerous data localization requirements. Entering a joint regulatory framework would substantially increase predictability for Indian firms.

In terms of domestic, the report calls for investment in digital infrastructure, IP frameworks and advance skill development to ensure that when barriers to access are unlocked India will be in a position to provide high quality services.

Observations from the UK deal, and next steps

Following India's recent UK services deal—which covered digital trade, mobility, and qualification recognition—NITI Aayog supports a similar US services-first approach, but adapted to the US environment and taking into account the US regulatory environment and any protectionist pressures.

Commerce Minister Piyush Goyal has suggested that trade discussions with the US are "moving at a very fast pace," and noted August–September 2025 as a timeframe for a final agreement on the content of the framework. Any agreements on this timeframe could allow India to avoid any tariffs that may come into effect in the US on certain goods and help rebalance trade with the US, by way of services-based engagement.

Dataquest take

India's innovation economy rooted in its tech services sector of $250+ billion, is well-placed for global scaling. To enable this opportunity, India needs robust market access, regulatory certainty, and mobility for talent in its key markets of US, UK, and EU. A services-first trade deal with US/UK would be key first step to unlocking global success in high value, knowledge-based exports.