Tariff cuts on pharma, gems, and aircraft parts in India-US interim trade deal

The framework also reaffirms plans to negotiate a broader bilateral trade agreement that would include additional market access offers.

• India and US agree to cut tariffs on industrial, agricultural, and pharma goods
• India to cut tariffs on US goods; US to reduce tariffs on Indian exports
• Framework sets 18% reciprocal tariff, aims for broader trade deal

Did our AI summary help?

India and the United States have agreed to cut tariffs on industrial goods, agricultural products, pharmaceuticals, gems and aircraft parts as part of a framework for an interim trade agreement.

The framework, announced jointly by the two sides on February 7, outlines commitments for an interim deal that will lower reciprocal tariffs on Indian exports to 18 percent next week, with further concessions on selected goods taking effect once the deal is formally signed around March.

It also reaffirms plans to negotiate a broader bilateral trade agreement that would include additional market access offers.

The agreement also commits India and the US to closer alignment on economic security, with a focus on strengthening supply chain resilience and innovation. This will include coordinated efforts to address non-market policies of third parties, cooperation on inbound and outbound investment reviews, and alignment on export control regimes.

The United States will apply a reciprocal tariff rate of 18 percent on goods originating from India, including textiles and apparel, leather and footwear, plastic and rubber, organic chemicals, home décor, artisanal products, and certain machinery.

This change will be implemented through an executive order.

Under the framework, India will eliminate or reduce tariffs on all American industrial goods and on a wide range of US food and agricultural products, including dried distillers’ grains, red sorghum for animal feed, tree nuts, fresh and processed fruits, soybean oil, wine, and spirits.

India also agreed to address long-standing non-tariff barriers affecting American exports, including regulatory hurdles faced by US medical devices, agricultural goods, and information and communication technology products.

India will also determine, within six months of the agreement’s entry into force, whether US-developed or international standards, including testing requirements, can be accepted for US exports entering the Indian market in identified sectors, with a view to a positive outcome.

The United States, in return, will roll back tariffs on key Indian exports, including generic pharmaceuticals, gems and diamonds, and aircraft and aircraft parts, subject to the successful conclusion of the interim agreement.

Washington has also agreed to lift certain national security-related tariffs on Indian aircraft and aircraft parts imposed under steel, aluminum, and copper trade measures, and to grant India preferential tariff-rate quotas for automotive parts.

Additional negotiated outcomes for Indian pharmaceutical ingredients will depend on the findings of an ongoing US Section 232 investigation.

“The United States and India will promptly implement this framework and work towards finalizing the Interim Agreement with a view to concluding a mutually beneficial BTA consistent with the roadmap agreed in the Terms of Reference,” the statement said.