India, US announce interim trade pact framework, 18% tariff on Indian exports, sets $500 billion import target for India

India will strive to buy $ 500 billion worth of energy products, aircraft and aircraft parts, precious metals, technology products, and coking coal over the next five years from the United States as part of the interim trade agreement announced by US President Donald Trump and Prime Minister Narendra Modi.

A US-India joint statement issued today said India will eliminate or reduce tariffs on all US industrial goods and a wide range of US food and agricultural products, including fresh and processed fruit, soybean oil, wine and spirits, dried distillers’ grains (DDGs), red sorghum for animal feed, tree nuts and additional products as part of the interim agreement.

As part of the agreement, United States will significantly increase trade in technology products, including Graphics Processing Units (GPUs) and other goods used in data centres, and expand joint technology cooperation.

In return, the US will cut the unilateral tariff it has imposed on India to 18% on several goods including textile and apparel, leather and footwear, plastic and rubber, organic chemicals, home décor, artisanal products, and certain machinery immediately. Subject to the successful conclusion of the Interim Agreement, US will also remove the reciprocal tariff on a wide range of goods including generic pharmaceuticals, gems and diamonds, and aircraft parts. Export of certain aluminium, steel and copper aircraft and aircraft parts from India to the US will be cheaper. India will receive a preferential tariff rate quota for automotive parts.   

The interim agreement will also require India to facilitate import of US medical devices, eliminate restrictive import licensing procedures that delay market access for, or impose quantitative restrictions on, US Information and Communication Technology (ICT) goods and within six months of entry into force of the Agreement decide whether US-developed or international standards, including testing requirements, are acceptable for the purposes of US exports entering the Indian market in identified sectors. The joint statement says India has also agreed to address long-standing non-tariff barriers to the trade in US food and agricultural products.

Also read: India–US trade deal gives comparative edge to Indian exports over regional rivals, says ASSOCHAM’s Sanyal

The joint statement says both the countries have reached a framework for an Interim Agreement regarding reciprocal and mutually beneficial trade (Interim Agreement). It says framework reaffirms the countries’ commitment to the broader U.S.-India Bilateral Trade Agreement (BTA) negotiations, launched by Trump and Modi on February 13, 2025.