New Delhi / Washington: India and the United States have finalised an interim trade deal that marks a major reset in economic relations, sharply cutting tariffs and boosting cooperation across sectors including technology, energy and goods trade. Late Saturday (February 6) night, the White House announced that both the countries have finalised a framework for an “interim agreement” on reciprocal and mutually beneficial trade.
India’s Union Commerce Minister Piyush Goyal shared the joint statement on social media, announcing that the bilateral agreement with the US would “open a $30 trillion market for Indian exporters.”
The framework agreement, once implemented, will bring down reciprocal US tariffs on Indian goods to 18 per cent — a steep reduction from earlier punitive duties that had reached around 50 per cent after tariff escalations tied to India’s energy imports.
President Trump also signed an executive order announcing the removal of a 25% tariff on India, reported Hindustan Times.
Key takeaways of the agreement:
Tariff reduction on both sides: The United States will reduce its tariffs on Indian exports to a final 18 per cent, while India will reduce or eliminate tariffs on US industrial, food and agricultural goods.
Future zero-tariff categories: Once the interim framework is implemented in full, the US will end reciprocal tariffs on select Indian exports — including generic medicines, gemstones & diamonds, and aircraft parts.
Removal of national security tariffs on aircraft parts
The US will remove tariffs imposed on Indian aircraft and aircraft parts under earlier national security proclamations related to aluminium, steel and copper imports.
Mutual preferential market access commitment
Both countries have committed to providing each other preferential market access in sectors of mutual interest on a sustained basis.
Alignment on standards and conformity assessments
The two countries will discuss standards and conformity assessment procedures in mutually agreed sectors to improve ease of compliance.
Safeguard clause on tariff changes
If either country changes agreed tariff levels in the future, the other country will be allowed to modify its commitments in response.
Bilateral Trade Agreement (BTA) pathway
The interim framework has been placed as a stepping stone toward a full Bilateral Trade Agreement. The US has said, as reported by Hindustan Times, that it will consider India’s request for further tariff reductions on Indian goods during BTA negotiations.
Focus on tech trade: Enhanced trade in technology products like GPUs used in data centres and expanded cooperation in emerging technologies is a key feature of the agreement.
Digital trade cooperation: The pact emphasises cooperation on digital trade rules and efforts to remove discriminatory or burdensome practices.
