Washington/New Delhi (IANS): India gained tariff relief, better market access, and a stronger competitive position in the United States under a new interim trade framework announced by Washington and New Delhi. The two countries said they have reached a framework for an Interim Agreement on “reciprocal and mutually beneficial trade.” The move keeps talks on track for a full US-India Bilateral Trade Agreement, launched by President Donald Trump and Prime Minister Narendra Modi last February.
Prime Minister Narendra Modi on Saturday hailed the development, calling it ‘great news’ for both nations. Taking to the social media platform X, PM Modi said, “Great news for India and USA! We have agreed on a framework for an Interim Trade Agreement between our two great nations. I thank President Trump for his personal commitment to robust ties between our countries.”
Both sides called the framework a historic milestone. It aims for balanced trade and clear results. For India, the benefits center on tariffs, sector-specific access, and the easing of long-standing trade barriers.
Under the framework, the United States will apply a reciprocal tariff rate of 18 per cent on Indian goods. The list includes textiles and apparel, leather and footwear, plastics and rubber, organic chemicals, home décor, artisanal products, and some machinery.
The uniform rate gives India an edge over several countries in its neighborhood and the wider region. Many of those exporters face higher barriers or less predictable access to the US market. The 18 per cent rate also narrows the gap with Europe, which faces a 15 per cent tariff. The smaller difference improves the price position of Indian products. It helps exporters in textiles, apparel, leather goods, chemicals and engineering items. It also strengthens India’s hand against regional rivals competing on cost.
The framework also opens a path to tariff removal on a wide range of Indian goods. That step depends on the successful conclusion of the Interim Agreement. The list includes generic pharmaceuticals, gems and diamonds, and aircraft parts. These are sectors where India holds a strong global share and US demand is high.
Washington will also remove tariffs on certain Indian aircraft and aircraft parts. Those duties were imposed earlier under national security proclamations targeting aluminum, steel, and copper imports. India will receive a preferential tariff rate quota for automotive parts. These parts are covered by US national security tariffs on automobiles and auto components.
PM Modi said the framework reflects the “growing depth, trust and dynamism” of the India-US partnership and will strengthen the ‘Make in India’ initiative. “This framework reflects the growing depth, trust, and dynamism of our partnership. It strengthens ‘Make in India’ by opening new opportunities for India’s hardworking farmers, entrepreneurs, MSMEs, start-up innovators, fishermen, and more. It will generate large-scale employment for women and youngsters.”
PM Modi added that India and the US share a strong commitment to promoting innovation, and the agreement will deepen investment and technology partnerships between the two countries. “India and the United States share a commitment to promoting innovation, and this framework will further deepen investment and technology partnerships between us. This framework will also strengthen resilient and trusted supply chains and contribute to global growth. As India moves forward towards building a Viksit Bharat, we remain committed to building global partnerships that are future-oriented, empower our people, and contribute to shared prosperity.”
India’s pharmaceutical industry could see further gains. Outcomes tied to generic drugs and pharmaceutical ingredients will depend on a US Section 232 investigation. These products are a core Indian export to the US health care market, according to the joint statement.
Beyond tariffs, both countries agreed to provide preferential market access in sectors of sustained interest. They also agreed to set rules of origin. The goal is to ensure benefits flow mainly to the United States and India.
The framework addresses non-tariff barriers that have long weighed on trade. India agreed to address barriers affecting US medical devices. It also agreed to eliminate restrictive import licensing that delays market entry or imposes limits on US information and communication technology goods.
India committed to decide within six months of the agreement taking effect whether US or international standards can be accepted in identified sectors. This includes testing requirements. Similar commitments apply to long-standing barriers affecting US food and agricultural products.
The two sides plan talks on standards and conformity assessments. The aim is to make compliance easier and rules clearer. The framework allows either country to adjust commitments if agreed tariff levels change.
India also outlined a broader commercial push. It said it intends to buy $500 billion worth of US energy products, aircraft and aircraft parts, precious metals, technology products, and cooking coal over the next five years.
Trade in technology products is set to rise. This includes graphics processing units used in data centers. The two countries also agreed to expand joint technology cooperation.
The framework includes commitments on digital trade. Both sides said they will address discriminatory or burdensome practices. They aim to set a path toward ambitious digital trade rules as part of the full agreement.
Commerce and Industry Minister Piyush Goyal said the trade agreement will help “India and the US remain focused on working together to further deepen economic cooperation, reflecting shared commitment to sustainable growth for our people and businesses.”
“This will open a $30 trillion market for Indian exporters, especially MSMEs, farmers and fishermen. The increase in exports will create lakhs of new job opportunities for our women and youth,” said the minister.
As part of this framework, the US will slash reciprocal tariffs on Indian goods to 18 per cent, providing a huge market opportunity in key sectors such as textiles and apparel, leather and footwear, plastic and rubber products, organic chemicals, home decor, artisanal products, and select machinery in the world’s largest economy.
“Additionally, tariffs will go down to zero on a wide range of goods, including generic pharmaceuticals, gems & diamonds, and aircraft parts, thereby further enhancing India’s export competitiveness and ‘Make in India’,” said Goyal.
India will also get exemptions under Section 232 on aircraft parts, tariff rate quota on auto parts and negotiated outcomes on generic pharmaceuticals, leading to tangible export gains in these sectors.
“At the same time, the agreement reflects India’s commitment to safeguarding farmers’ interests and sustaining rural livelihoods by completely protecting sensitive agricultural and dairy products, including maize, wheat, rice, soya, poultry, milk, cheese, ethanol(fuel), tobacco, certain vegetables, meat, etc,” Goyal explained. “Towards realising Viksit Bharat under PM Modi’s guidance,” he added.
