India and the United States have reached consensus on an interim trade agreement, approving the framework through a joint statement issued by both countries. The agreement formalises terms aimed at facilitating bilateral trade between the two sides.
Under the interim trade agreement, the United States will reduce tariffs on Indian products from 50 percent to 18 percent. The tariff reduction is intended to improve market access in the United States for Indian micro, small and medium enterprises, farmers, fishermen and small entrepreneurs.
The reduction in tariffs will apply across multiple sectors, including textiles, garments, leather and footwear, plastic and rubber products, organic chemicals, home décor, handicrafts and selected machinery, enabling expanded access to the US market for these goods.
Tariffs on generic medicines, gems and diamonds, and aircraft parts will be reduced to zero. India will also receive exemptions for aircraft parts under Section 232, tariff rate quotas on auto parts, and positive outcomes in discussions on generic pharmaceuticals.
India has ensured protection for its sensitive agricultural and dairy products. Commodities including maize, wheat, rice, soy, poultry, milk, cheese, ethanol for fuel, tobacco, certain vegetables and meat will remain fully protected, ensuring that Indian farmers and dairy producers face no competitive pressure from the US market.
As part of the agreement, India will reduce or eliminate tariffs on selected US industrial and agricultural products. These include dried distillers grains, red sorghum used for animal feed, tree nuts, fresh and processed fruits, soybean oil, wine and spirits. The measures are intended to support trade balance and mutual benefit between the two countries.
Both countries have also agreed to address non-tariff barriers and remove obstacles affecting digital trade. India will lift long-standing restrictions on US medical devices and improve licensing procedures for information technology and communication technology products.
India and the United States will expand trade in technology products and strengthen joint technology cooperation, including in graphics processing units, equipment used in data centres, and other advanced technologies.
The agreement is expected to support growth in trade and generate new employment opportunities, including for MSMEs, youth and women. The two countries will also strengthen economic security cooperation to reinforce supply chains and promote innovation.
