India and the United States have agreed on an interim trade framework that advances their ongoing Bilateral Trade Agreement (BTA) talks, with both sides committing to deepen market access, address digital trade barriers and lay the groundwork for a comprehensive pact.
Under the framework, India will eliminate or reduce tariffs on all U.S. industrial goods and a broad set of agricultural and food products, while Washington will apply a reciprocal tariff rate of 18% on Indian exports, with scope for further reductions as negotiations move forward.
The agreement signals a reset in bilateral trade ties, combining tariff adjustments, digital trade commitments, non-tariff barrier reforms, supply chain cooperation and large commercial purchases into a single negotiating roadmap.
The joint framework clearly states that both sides will promptly implement the framework, work towards finalising the Interim Agreement, and then move to a comprehensive Bilateral Trade Agreement (BTA) based on the agreed roadmap.
It also explicitly records that the US will take into consideration India’s request to continue working to lower tariffs on Indian goods during the BTA negotiations.
Under the framework, India will cut duties on several U.S. food and farm products, including dried distillers’ grains, red sorghum used as animal feed, tree nuts, fresh and processed fruits, soybean oil, wine and spirits, alongside other industrial goods.
In return, the United States will impose a reciprocal tariff of 18% on originating goods from India under an executive order issued in April 2025, covering sectors such as textiles and apparel, leather and footwear, plastics and rubber, organic chemicals, home décor, artisanal products and certain categories of machinery.
However, subject to the successful conclusion of the interim agreement, the US has agreed to remove the reciprocal tariffs on a wide range of goods listed for “aligned partners”, including generic pharmaceuticals, gems and diamonds, and aircraft parts, according to the joint statement released by the two countries on Saturday morning (India time).
The framework also provides relief from national security-related tariffs for specific sectors. The US will remove duties on certain Indian aircraft and aircraft parts that were imposed under earlier metal and copper-related proclamations, while India will receive a preferential tariff-rate quota for automotive parts currently subject to US national security tariffs.
As per the Interim Agreement framework, the United States has agreed to remove tariffs on certain Indian aircraft and aircraft parts that were previously subject to Section 232-related duties. At the same time, India will receive a preferential tariff-rate quota for automotive parts under the national-security-related auto tariff regime.
However, the 50% Section 232 tariffs on steel, aluminium and copper remain in place, and there has been no blanket rollback of these duties under the interim deal. Indian exporters in these metal sectors will continue to face steep tariffs unless the full BTA delivers additional market access outcomes later.
In pharmaceuticals, any final outcome will be contingent on the findings of an ongoing US investigation, with negotiated results envisaged for Indian generic medicines and ingredients.
It means that India’s gains in pharmaceuticals are not automatic yet. The US is still examining whether imports of medicines and pharmaceutical ingredients pose any national security risk under its domestic investigation, and only after that review is completed will tariff relief or other concessions for Indian generic drugs be finalised.
Beyond tariffs, both sides have committed to granting each other preferential market access on a sustained basis and to framing rules of origin that ensure the benefits of the agreement accrue primarily to India and the US. They have also agreed to address long-standing non-tariff barriers affecting bilateral trade.
India has undertaken to ease barriers faced by U.S. medical devices, remove restrictive import licensing procedures that delay or cap market access for U.S. information and communication technology products, and decide within six months of the agreement’s entry into force whether U.S. or international standards can be accepted for exports into identified Indian sectors.
New Delhi has also agreed to work on resolving long-pending concerns related to U.S. food and agricultural exports.
To improve regulatory predictability, both countries plan to hold discussions on standards and conformity assessment procedures in mutually agreed sectors, aimed at reducing compliance costs for businesses. The framework also includes a safeguard clause allowing either side to modify commitments if the other changes agreed tariff levels, reflecting the interim nature of the arrangement.
Strategically, the agreement places strong emphasis on economic security and supply chain resilience. India and the US have agreed to deepen alignment to counter non-market policies of third countries, cooperate on investment screening and export controls, and enhance innovation through closer coordination.
In a major commercial signal, India has indicated its intention to purchase $500 billion worth of U.S. energy products, aircraft and aircraft parts, precious metals, technology goods and coking coal over the next five years. The two sides also plan to sharply increase trade in advanced technology products, including graphics processing units used in data centres, and to expand joint technology cooperation.
Digital trade has emerged as another key pillar, with both countries committing to address discriminatory or burdensome practices and to chart a pathway for robust and mutually beneficial digital trade rules as part of the BTA.
While the punitive tariff component has now been withdrawn, claims made by US President Donald Trump that India has committed to cutting crude oil imports from Russia have not been officially announced by the Indian side so far, even as available data points to a gradual moderation in India’s purchases of Russian crude.
Announcing broad details of the agreement a day after it was unveiled by Trump on the night of 2 February and subsequently acknowledged by Prime Minister Narendra Modi, Union commerce minister Piyush Goyal said on 3 February that the deal protected all sensitive sectors, signalling the government’s continued commitment to the interests of farmers, fishermen and the dairy sector.
India’s agricultural imports from the US saw a broad-based rise in FY25, led by a sharp jump in lentil shipments, which climbed to $78.43 million and 69,945 tonnes, from $21.11 million and 17,557 tonnes in FY24. Corn imports, though relatively small in value terms, also increased to $2.17 million in FY25 from $1.18 million a year earlier.
In higher-value categories, almond imports rose to $1,085.8 million from $1,023.2 million, registering a 6.12% year-on-year increase, while walnut imports recorded the steepest growth, nearly doubling to $27.88 million and 18,487 tonnes in FY25 from $14.58 million and 10,439 tonnes in the previous year.
Also, rice imports from the US that are allowed tariff-free recorded an increase, with shipments rising to $0.35 million in FY25 from $0.10 million in FY24, recording a growth of 250%.
Earlier, the Indian government relaxed re-export conditions for walnuts by extending the permissible export obligation period from six months to 18 months through a Directorate General of Foreign Trade (DGFT) circular issued on 27 March 2025 under the Advance Authorisation scheme. The move aligned walnuts with the standard eligibility period applicable to most other products and was seen as potentially benefiting US suppliers while improving supply-chain flexibility.
Howerer, Goyal has assured the people of India that this is a deal that will make every Indian proud. It protects the interests of the country and provides significant opportunities for all sections of society.