India–US interim trade deal: What’s in it for India, what’s in it for the US

The interim framework lowers US tariffs to 18%, opens Indian markets to US goods, and lays down rules for a broader Bilateral Trade Agreement.

• US and India reveal interim trade deal framework before full trade agreement.
• US reduces tariffs on Indian goods to 18%; India lowers tariffs on US exports.
• India signals intent to buy $500 billion in US goods over five years

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India and the United States on February 6 unveiled a framework for an Interim Trade Agreement, an early deliverable ahead of a full-fledged Bilateral Trade Agreement (BTA). The headline outcome: the US will cut reciprocal tariffs on Indian goods to 18 percent, while India commits to wide-ranging tariff reductions and regulatory easing for US exports.

This is not the final deal. But it locks in sector-level give-and-take, and sets the runway for a comprehensive BTA.

The core trade-off

India opens up: New or reduced tariffs across US industrial goods and a broad basket of agricultural products, from animal feed and nuts to fruits, soybean oil, wine, and spirits.

US eases pressure: A uniform 18 percent reciprocal tariff on Indian exports, with a path to removing tariffs altogether on selected products once the interim deal is concluded.

Which Indian exports benefit

The US tariff reset applies immediately to Indian-origin goods including:

• Textiles and apparel, leather and footwear, plastics and rubber, organic chemicals, home décor, artisanal products, and select machinery.
• Further relief is promised, subject to completion of the interim agreement, for generic pharmaceuticals, gems and diamonds, and aircraft parts.

What happens to national security tariffs

Washington will roll back Section 232-style tariffs on Indian aircraft and aircraft parts tied to earlier proclamations on aluminium, steel, and copper.

India, in return, secures preferential tariff-rate quotas for auto components and a negotiated pathway on pharmaceuticals, pending a US investigation.

Non-tariff barriers: the quiet but crucial shift

India has agreed to tackle long-standing US complaints by:

• Easing price and regulatory barriers in medical devices
• Removing restrictive import licensing for ICT products
• Reviewing, within six months, whether US or international standards can be accepted for Indian market access
• Addressing non-tariff hurdles in US agricultural imports

Rules of origin and safeguard clauses

Both sides will set rules of origin to ensure benefits flow primarily to India and the US, not third countries.

If either side changes tariffs later, the other can revisit its commitments, building an automatic rebalancing clause into the pact.

Digital trade and tech supply chains

The framework commits both countries to:

• Remove discriminatory digital trade practices
• Create a pathway for ambitious digital trade rules in the BTA
• Deepen cooperation on data centres, GPUs, and advanced technology
• Align more closely on export controls, investment screening, and supply chain security

The $500-billion signal

India has indicated its intent to buy $500 billion worth of US goods over five years, spanning energy, aircraft, technology products, precious metals, and coking coal.

While not a binding purchase order, the number is meant to anchor negotiations and reassure Washington on trade balance concerns.