India and the United States have finalised an interim trade agreement that will reduce US tariffs on Indian goods to a final rate of 18 per cent, marking a major step forward in bilateral economic ties.
Union Commerce Minister Piyush Goyal said the framework “represents a historic milestone in our countries’ partnership,” sharing the text of the agreement on Friday.
Before the deal, Indian exports to the US faced tariffs of up to 50 per cent, including a 25 per cent penalty linked to India’s purchase of Russian oil. The new agreement significantly eases this burden.
Key Highlights of the Interim Framework
Under the deal, both countries have agreed to lower tariffs. The US will reduce duties on Indian goods to 18 per cent, while India will remove or cut tariffs on a wide range of American industrial, food, and agricultural products.
Once implemented, the US will also end reciprocal tariffs on key Indian exports such as pharmaceuticals, gemstones and diamonds, and aircraft parts.
The agreement addresses several non-tariff barriers affecting trade in medical devices, agricultural products, and information and communication technology (ICT) goods.
India has committed to easing restrictions on US medical devices, eliminating restrictive import licensing procedures for American ICT products, and reviewing whether US and international standards can be accepted for exports to the Indian market within six months of the agreement’s entry into force.
New Delhi will also reassess long-standing non-tariff barriers affecting US food and agricultural imports.
Major Purchase Commitments and Digital Trade
According to the framework and an announcement by US President Donald Trump on Truth Social, India has agreed to purchase around $500 billion worth of US energy products, aircraft and aircraft parts, metals, coal, and technology products over the next five years.
Digital trade forms a key pillar of the agreement, with both sides pledging to address discriminatory or burdensome practices affecting online commerce.
The two countries will also work to expand trade in advanced technology products, including graphics processing units (GPUs) for data centres, and strengthen cooperation in the technology sector.
Path to a Broader Trade Agreement
The framework allows for adjustments if either side changes tariff policies in the future. Both countries have agreed to modify commitments accordingly and continue negotiations toward a broader bilateral trade agreement (BTA).
During these talks, the US has also said it will review its existing tariffs on Indian goods and consider reducing or removing them further.
The interim deal is expected to boost trade flows and deepen strategic and economic ties between New Delhi and Washington.
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