India and the United States have announced a framework for an interim trade agreement aimed at advancing reciprocal and mutually beneficial trade, while reaffirming their commitment to negotiating a broader Bilateral Trade Agreement BTA launched by Prime Minister Narendra Modi and U.S. President Donald J. Trump on 13 February 2025.
The framework is expected to serve as a milestone in the bilateral partnership, reflecting a shared commitment to balanced trade based on mutual interests and concrete outcomes, while supporting more resilient supply chains.
Under the proposed arrangement, India will eliminate or reduce tariffs on all U.S. industrial goods and a wide range of agricultural products such as dried distillers’ grains, red sorghum for animal feed, tree nuts, fresh and processed fruit, soybean oil, wine and spirits, among other items.
In return, the United States will apply a reciprocal tariff rate of 18 per cent on originating Indian goods under Executive Order 14257.
Read also : India moves to strengthen financial system against emerging cyber threats
The tariff will cover sectors including textiles and apparel, leather and footwear, plastic and rubber, organic chemicals, home decor, artisanal products and certain machinery.
The US has also indicated that, subject to the successful conclusion of the interim agreement, it will remove reciprocal tariffs on a wide range of goods listed in the Potential Tariff Adjustments for Aligned Partners annex, including generic pharmaceuticals, gems and diamonds, and aircraft parts.
Additionally, the United States will remove tariffs on certain Indian aircraft and aircraft parts that were imposed under national security-related proclamations concerning aluminium, steel and copper imports.
India is also set to receive a preferential tariff rate quota for automotive parts subject to similar national security tariffs, while negotiated outcomes are expected with respect to generic pharmaceuticals and ingredients depending on the findings of a U.S. Section 232 investigation.
Both countries have committed to providing each other preferential market access in sectors of respective interest on a sustained basis and will establish rules of origin to ensure that the benefits of the agreement accrue predominantly to India and the United States.
As part of the framework, India has agreed to address long-standing non-tariff barriers affecting trade in U.S. medical devices, eliminate restrictive import licensing procedures that delay market access or impose quantitative restrictions on U.S. information and communication technology goods, and determine within six months of the agreement’s entry into force whether U.S.-developed or international standards will be accepted for identified sectors.
The two sides also intend to discuss standards and conformity assessment procedures to enhance ease of compliance with technical regulations and have agreed that if either country changes the agreed tariffs, the other may modify its commitments.
India has expressed its intention to purchase $500 billion worth of U.S. energy products, aircraft and aircraft parts, precious metals, technology products and coking coal over the next five years.
The countries also plan to significantly increase trade in technology products, including graphics processing units and other goods used in data centres, while expanding joint technology cooperation.
The framework further commits both nations to strengthen economic security alignment to enhance supply chain resilience and innovation through complementary actions addressing non-market policies of third parties, alongside cooperation on investment reviews and export controls.
Both governments said they will promptly implement the framework and work toward finalising the interim agreement with a view to concluding a mutually beneficial Bilateral Trade Agreement consistent with the agreed roadmap.
Read also : RBI proposes allowing bank lending to REITs, signals policy shift in real estate financing
