Prime Minister Narendra Modi and United States Vice-President JD Vance on Monday welcomed “significant progress” in talks towards a bilateral trade agreement, and called for “dialogue and diplomacy” as the way forward.

Vance arrived in India on Monday on a four-day visit. He met Prime Minister Modi in New Delhi on Monday evening.

India’s Ministry of External Affairs said that both leaders “welcomed the significant progress in the negotiations for a mutually beneficial India-U.S. Bilateral Trade Agreement focused on the welfare of the people of the two countries”.

The ministry added: “Likewise, they noted continued efforts towards enhancing cooperation in energy, defence, strategic technologies and other areas.”

The White House also said that there had been “significant progress” in negotiations for the deal, The Indian Express reported.

The United States said that the proposed bilateral trade pact was a chance to negotiate a “new and modern trade agreement focused on promoting job creation and citizen well-being in both countries, with the goal of enhancing bilateral trade and supply-chain integration in a balanced and mutually beneficial manner”.

The statements came amid uncertainty in trade ties between India and the US after United States President Donald Trump announced “reciprocal” tariffs on dozens of countries, including a 26% “discounted” levy on India. The tariffs were to take effect on April 9, but the US government subsequently reduced tariffs on imports from most countries to 10% for 90 days to provide time for trade negotiations.

However, the US hiked the levies on Chinese imports, initially to 125% and then to 145%, marking a sharp escalation in trade tensions between the world’s two largest economies. In return, China raised tariffs on US goods to 125%.

On April 5, the US imposed a 10% minimum tariff on most goods imported into the country. It also imposed a 25% tariff on all foreign-made automobiles, which took effect on April 3.

Trump had repeatedly said he intended to impose a reciprocal tax on India, among others, citing high tariffs the countries impose on foreign goods.

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