India-US Tariff : Market Access Expanded in Key Sectors
According to a joint statement released by the White House early Saturday, India and the United States have agreed on a framework for an interim agreement focused on reciprocal and mutually beneficial trade. This development reaffirms the commitment of both nations to ongoing negotiations for a broader Bilateral Trade Agreement (BTA), which were initiated by Prime Minister Narendra Modi and US President Donald Trump in February 2025.
The framework emerges following nearly a year of trade tensions, triggered initially by US tariffs on Indian goods and their subsequent escalation to 50% in response to India’s purchases of Russian oil. In a related move, President Trump signed an executive order on Saturday lifting the additional 25% punitive tariff imposed on India over those oil imports.
Under the terms of the interim framework, India has committed to eliminating or substantially reducing tariffs on all US industrial goods as well as a wide array of American food and agricultural products. These include dried distillers’ grains (DDGs), red sorghum for animal feed, tree nuts, fresh and processed fruits, soybean oil, wine, spirits, and other specified items.
In exchange, the United States will impose a reciprocal tariff rate of 18% on various Indian-origin goods, covering sectors such as textiles and apparel, leather and footwear, plastics and rubber, organic chemicals, home décor, artisanal products, and certain machinery categories. Upon successful finalization of the interim agreement, Washington will remove reciprocal tariffs on a broader range of Indian exports, including generic pharmaceuticals, gems and diamonds, and aircraft parts.
Additional provisions include the lifting of certain US tariffs on Indian aircraft and aircraft parts previously applied on national security grounds related to aluminium, steel, and copper imports. India will benefit from a preferential tariff rate quota for automotive parts exported to the US, consistent with American national security considerations. Outcomes for generic pharmaceuticals and related ingredients remain subject to an ongoing US investigation.
Both countries have pledged to ensure sustained preferential market access in mutually important sectors and to establish rules of origin so that the agreement’s advantages primarily benefit India and the United States. The framework emphasizes addressing non-tariff barriers, with India agreeing to resolve issues impacting US medical devices, ease restrictive import licensing for information and communication technology goods, and review within six months the potential acceptance of US or international standards and testing requirements for American exports in select sectors. Efforts will also focus on overcoming barriers to US food and agricultural exports.
To enhance regulatory alignment, the two sides plan discussions on standards and conformity assessment procedures in agreed sectors to simplify compliance with technical regulations. The agreement includes a clause allowing either party to adjust commitments if the other modifies agreed tariff levels in the future.
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The framework lays the groundwork for expanded market access through continued BTA negotiations, with the US indicating willingness to consider India’s requests for further tariff reductions on its goods. Both nations aim to bolster economic security, improve supply chain resilience, and foster innovation through coordinated measures against non-market policies, investment screening, and export controls.
India has expressed intent to procure goods valued at $500 billion from the United States over the next five years, encompassing energy products, aircraft and parts, precious metals, technology items, and coking coal. Cooperation will deepen in technology products like graphics processing units and data center equipment, alongside critical technologies.
The countries also committed to tackling discriminatory practices in digital trade and developing robust digital trade rules within the broader BTA.
Both sides plan to implement the framework swiftly and finalize the interim agreement, with the ultimate objective of concluding a comprehensive, mutually beneficial Bilateral Trade Agreement aligned with the established roadmap.