The framework reaffirms the two countries’ commitment to the broader US-India Bilateral Trade Agreement (BTA) negotiations, launched by President Donald J. Trump and Prime Minister Narendra Modi on February 13, 2025, which will include additional market access commitments and support more resilient supply chains.
The Interim Agreement signals faster tariff relief and supply-chain realignment ahead of a full US–India BTA.
An 18 per cent reciprocal tariff offers predictability for Indian exporters, especially textiles and apparel.
India’s tariff cuts and large US purchases deepen strategic trade ties, while RoO and NTB reforms aim to lock in balanced, long-term gains.
The Interim Agreement “will represent a historic milestone in our countries’ partnership, demonstrating a common commitment to reciprocal and balanced trade based on mutual interests and concrete outcomes,” the statement said.
As per the Agreement, India will eliminate or reduce tariffs on all US industrial goods and a wide range of US food and agricultural products, including dried distillers’ grains (DDGs), red sorghum for animal feed, tree nuts, fresh and processed fruit, soybean oil, wine and spirits, and additional products.
The United States will apply a reciprocal tariff rate of 18 per cent under Executive Order 14257 of April 2, 2025 (Regulating Imports With a Reciprocal Tariff to Rectify Trade Practices That Contribute to Large and Persistent Annual United States Goods Trade Deficits), as amended, on originating goods of India, including textile and apparel, leather and footwear, plastic and rubber, organic chemicals, home décor, artisanal products, and certain machinery, and, subject to the successful conclusion of the Interim Agreement, will remove the reciprocal tariff on a wide range of goods identified in the Potential Tariff Adjustments for Aligned Partners Annex to Executive Order 14346 of September 5, 2025 (Modifying the Scope of Reciprocal Tariffs and Establishing Procedures for Implementing Trade and Security Agreements), as amended, including generic pharmaceuticals, gems and diamonds, and aircraft parts.
The United States will also remove tariffs on certain aircraft and aircraft parts of India imposed to eliminate threats to national security found in Proclamation 9704 of March 8, 2018 (Adjusting Imports of Aluminum Into the United States), as amended; Proclamation 9705 of March 8, 2018 (Adjusting Imports of Steel Into the United States), as amended; and Proclamation 10962 of July 30, 2025 (Adjusting Imports of Copper Into the United States). Similarly, consistent with US national security requirements, India will receive a preferential tariff rate quota for automotive parts subject to the tariff imposed to eliminate threats to national security found in Proclamation 9888 of May 17, 2019 (Adjusting Imports of Automobiles and Automobile Parts Into the United States), as amended. Contingent on the findings of the US Section 232 investigation of pharmaceuticals and pharmaceutical ingredients, India will receive negotiated outcomes with respect to generic pharmaceuticals and ingredients.
In addition, both countries commit to provide each other preferential market access in sectors of respective interest on a sustained basis.
Further, both countries will establish rules of origin (RoO) that ensure that the benefits of the Agreement accrue predominately to the United States and India.
The United States and India will also address non-tariff barriers that affect bilateral trade. India has agreed to address long-standing barriers to the trade in 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 determine, with a view towards a positive outcome, within six months of entry into force of the Agreement whether US-developed or international standards, including testing requirements, are acceptable for the purposes of US exports entering the Indian market in identified sectors. India has also agreed to address long-standing non-tariff barriers to the trade in US food and agricultural products, the statement said.
The statement said that India intends to purchase $500 billion of US energy products, aircraft and aircraft parts, precious metals, technology products, and coking coal over the next five years. India and the 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.
“The United States and India will promptly implement this framework and work towards finalising the Interim Agreement with a view to concluding a mutually beneficial BTA consistent with the roadmap agreed in the Terms of Reference BTA consistent with the roadmap agreed in the Terms of Reference,” the statement concluded.
Fibre2Fashion News Desk (RKS)
