New Delhi: India is set to gain zero-duty access for goods worth around $44 billion, nearly half of its merchandise exports to the US, under the first phase of the India–US bilateral trade agreement, commerce and industry minister Piyush Goyal said on Saturday.
The minister described the pact as a calibrated opening that expands export opportunities while fully protecting sensitive domestic sectors, especially agriculture and dairy.
Addressing a press conference to clarify the commitments outlined in the joint statement issued by the White House in the early hours of Saturday, Goyal said India has ensured carefully crafted exemption lines for products such as dairy items, soyameal, lentils, cereals and millets including jowar, bajra and kodo, fruits like bananas and strawberries, green peas, honey, flowers, meat products, ethanol for fuel blending and genetically modified (GM) foods, underlining that farmers’ interests have been fully safeguarded.
On allowing the import of distillers’ dried grains with solubles (DDGS), a genetically modified (GM) product, he said after processing, the characteristics of genetic modification are eliminated.
However, the minister’s briefing did not address the contentious issue of India’s reported commitment to reduce imports of Russian crude oil or the US administration’s claim that it would monitor such purchases. Responding to a question, Goyal said the ministry of external affairs would provide the details.
As per the joint statement and the subsequent executive order issued by the US President, the US has removed the additional 25% punitive duty with immediate effect, while, under the joint statement, the reciprocal tariff of 25% is to be reduced to 18%.
Under the agreement, the US has removed the additional 25% punitive duty on Indian goods with immediate effect. “While the 25% duty is to be withdrawn immediately, the 18% rate is expected to come into force after a fresh order by the US administration, possibly next week,” said the minister.
Sector-specific tariffs imposed under Section 232 will continue for steel, aluminium and copper at 50%. In auto components, the existing 25% tariff will be eliminated on half the import volume, while the remaining half will continue to attract the same duty.
“As far as steel, aluminium and copper are concerned, a 50% tariff has been imposed on the entire world,” Goyal said.
However, the US will gain zero-duty access for several products, including Harley-Davidson motorcycles, on which the duty had already been reduced to 30% from 50% in the last Budget.
Open-ended pact
The agreement remains open-ended, with discussions set to continue and more products likely to be added or removed by mutual consent as talks evolve. “This is the first tranche of the India–US bilateral trade agreement,” Goyal said.
Once legally concluded, several Indian exports will attract zero duty in the US, including aircraft parts, machinery components, generic drugs and pharmaceutical products, basic auto parts, and gems and diamonds. Smartphones will continue to enjoy zero-duty access, while electronic goods will remain exempt under the most-favoured-nation (MFN) regime at a weighted average tariff of around 0.41%.
Labour-intensive sectors such as textiles, leather, toys, sports goods and Indian silk products are expected to gain from reduced or zero duties, improving India’s competitiveness in the US market. However, the applicable tariff—either zero or 18%—will become clear only after the US issues the executive order implementing the revised tariff regime.
Goyal said that the marine sector is already “celebrating”, citing a 20% jump in seafood exports following improved access to the EU market.
US farm imports
As far as market access for US agricultural products is concerned, Goyal said that these products were already imported since the UPA regime, and under the trade agreement framework, certain quotas have been allocated for the import of items such as tree nuts and apples, among others.
“There is no cause for concern for Indian apple growers. We have protected their interests,” he said.
The framework will also facilitate access to advanced technologies such as AI chips, data centres, aircraft, semiconductors, high-end machinery and quantum technologies, strengthening India’s industrial capacity and national security preparedness, the minister said.
Addressing concerns around domestic industry, Goyal said, “MSMEs, handicrafts and handloom sectors will not be hur.”
He stressed that India’s opening in areas such as ICT goods was a strategic necessity, pointing to the income gap between the two countries.
He pointed to the need for affordable access to advanced technologies, AI equipment and data centre infrastructure to stay globally competitive.
“Zero duty on smartphones would continue, giving India’s smartphone manufacturing ecosystem a sustained edge,” he said, adding that the agreement would help India gradually move away from restrictive authorisation regimes in critical technology imports.
On digital trade, the minister said there are no discriminatory barriers and all concerns will be addressed through bilateral consultations.
He said gold and platinum importers would benefit from improved access terms, while wine and spirits would see fair and balanced outcomes as part of the overall trade equilibrium.
Goyal highlighted the growing strategic alignment between the two countries, calling India and the US “natural partners” in building resilient supply chains, and pointed to India’s deepening role in global manufacturing.
Describing the agreement as the first phase of a larger bilateral process, he said that further negotiations would continue to deepen trade ties while maintaining balance and sensitivity.
“This is a win-win deal,” he said, adding that India’s exporters, manufacturers and consumers stand to benefit as the trade relationship moves towards greater scale, stability and mutual trust.
India has also committed to taking bilateral trade between the two countries to $500 billion over the next five years. In addition, India has agreed to procure significant volumes of US energy products, aircraft and aircraft parts, precious metals, technology goods and coking coal during this period. 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 cooperation in critical and emerging technologies.
What experts say
“This interim deal offers India some tariff relief, but a closer reading shows an uneven exchange, with most permanent concessions flowing from India to the US,” said Ajay Srivastava of the Global Trade Research Initiative (GTRI).
“Washington has merely rolled back its unsustainable reciprocal tariffs—cutting them from 50% to 18% on about 55% of Indian exports—without reducing MFN tariffs at all, while India has agreed to cut or eliminate MFN duties across a wide range of US industrial and agricultural goods,” Srivastava said.
“India has given selective concessions on the agricultural side, agreed for purchase of energy products and agreed to lower non-tariff barriers, a US demand for a long time and has in turn secured market access and preferential treatment for the majority of its products including textiles and pharmaceuticals,” said Bipin Sapra, partner and indirect tax policy leader, EY India
The proposed 18% tariff on India would be lower than or comparable to several South and Southeast Asian countries, including Bangladesh (20%), Sri Lanka (20%) and Vietnam (20%). It would be slightly higher than tariffs faced by more developed economies such as Japan (15%) and South Korea (15%) under negotiated frameworks.
India’s merchandise exports to the US rose from $77.52 billion in FY24 to $86.51 billion in FY25, while imports increased from $42.20 billion to $45.63 billion, expanding total bilateral trade to $132.14 billion, as per official data.
Exports held up even under high tariffs, rising to $7.01 billion in December 2025 from $6.98 billion in November. During April-December 2025, exports grew about 10% to $65.88 billion, with India recording a trade surplus of $26.45 billion.
“The duty cuts should bring retail prices down for premium nuts, fruits, wines, and particularly soybean oil, making them more accessible to middle-class households and potentially easing input costs for food processors and the livestock sector,” said Suresh Nair, tax partner, EY India.
“The US opening its market to processed food items from India, including jams and juices, creates new growth opportunities for Indian FMCG and food brands,” said Manoj Mishra, partner and tax controversy management leader, Grant Thornton Bharat for Consumer Products.
“The tariff eliminations and enhanced market access arising from this agreement will greatly strengthen the global competitiveness of Indian textiles and apparel sector. This will also address the issue of non-tariff barriers to trade and reduce the compliance burden and procedural delays leading to the faster movement of goods to the US market,” said A. Sakthivel, chairman, Apparel Export Promotion Council.