India-US trade framework could lift exports to $300 billion a year: Govt sources

The reciprocal US tariffs on Indian goods will drop to 18% from 50%, giving India a lower rate than major competitors such as China, Vietnam, Bangladesh and Indonesia.

• US to cut reciprocal tariffs on Indian goods to 18 percent within days
• India can export up to $300 billion annually to US under new trade framework
• Indian goods will face lower tariffs than China, Vietnam, and Bangladesh

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The US is expected to issue an executive order within the next three to four days to reduce reciprocal tariffs on Indian goods to 18%, following the finalisation of the India-US joint statement on the interim trade framework, government sources said on Saturday.

The sources also said the interim framework has the potential to significantly scale up India’s exports to the US. “Based on the framework agreement, India can export up to $300 billion annually to the US,” a source said, pointing to expanded market access, tariff relief and regulatory easing across key sectors.

Penal tariffs of 25 percent linked to Russian-origin trade have already been removed, leading to an immediate reduction in effective tariff rates. As a result, tariffs have dropped to 25 percent from February 7, after the penal duties were knocked off.

“The tariff rate is currently at 25 percent from February 7 as penal duties have been removed. It will come down further to 18% once the US issues the reciprocal tariff reduction executive order, which should happen shortly now that the joint statement is finalised,” noted the government source.

Further tariff concessions, including zero-duty commitments by both sides on select products, will take effect only after the legal agreement is signed, which is expected around March, the source added.

On generic pharmaceuticals, the government source said India has secured protection even though a formal Section 232 order from the US has not yet been issued for the sector. “The 232 order on generic pharma hasn’t come yet. The sword was hanging, but that sword has been removed in the joint statement,” the source said.

The source added that even if the US were to impose Section 232 tariffs on generic pharmaceuticals in the future, Indian exports would face zero tariffs under the agreed framework.

Commerce Minister Piyush Goyal, addressing the press on Saturday, said the interim India-US trade framework marks a key milestone towards the $500-billion annual trade target under BTA talks launched in February 2025, asserting that India has secured significant tariff gains without compromising farmer interests.

He said reciprocal US tariffs on Indian goods will drop to 18% from 50%, giving India a lower rate than major competitors such as China, Vietnam, Bangladesh and Indonesia.