US order on lowering India tariff to 18% expected this week, says Piyush Goyal

Commerce Minister Piyush Goyal

• India-US interim trade deal to cut reciprocal tariffs to 18% this week
• Key sectors like textiles, gems, gold jewellery, and food processing to benefit
• Farmers' interests protected; maize, dairy, and staples excluded from the deal

Did our AI summary help?

US President Donald Trump is expected to issue an executive order this week reducing reciprocal tariffs on Indian goods from 50 percent to 18 percent, as agreed in the India–US interim trade deal, and it will come into effect immediately, commerce and industry minister Piyush Goyal has said in an interview with CNBC Awaaz.

The remaining components of the trade deal are likely to be finalised by mid-March, the minister said, adding the agreement fully protects farmer interests. Edited excerpts of the interview:

When will the interim trade deal be implemented?

The executive order to reduce reciprocal tariffs to 18 percent should be issued this week, after which the revised duty will be implemented immediately. The legal documentation for the remaining aspects of the interim deal will take about one to one-and-a-half months. The entire deal is expected to be implemented by mid-March, around March 15–20.

How will this deal strengthen strategic ties and the investment climate between India and the US?

This trade deal has sent a very strong signal to investors. It will not only encourage higher investment from the US but will also attract global investors toward India.

Which sectors will benefit most from the reduction of reciprocal tariffs to 18%?

Smartphones were already being exported to the US at zero duty and will continue to enjoy zero duty. Gems and diamonds will also attract zero duty after this deal. Gold jewellery will face a reduced duty of 18 percent.

For generic pharmaceutical products and their ingredients, an investigation is underway in the US under Section 232. I have been assured that once the investigation concludes, duties on these products will be reduced to zero.

Textiles, apparel, leather, handloom, handicrafts, engineering goods, and auto components will attract an 18 percent duty, lower than that of competing countries. This will boost exports and generate large-scale employment, as these are labour-intensive sectors. Increased investment will also help achieve economies of scale.

India has already signed trade agreements with the UK, 27 EU nations, four EFTA countries, Australia, and New Zealand. With the addition of the US deal, exports to several markets will now take place at zero duty. This opens up a massive opportunity for the textile sector and encourages investors to set up large manufacturing units.

Food-processing is another sector set to benefit significantly. Farmers linked to this sector will see higher incomes and valuations of processed food companies have already begun to rise.

After the imposition of the 50 percent tariff, exports in segments such as textiles and shrimp reportedly fell by up to 40 percent. How long will it take for exports to recover?

In reality, exports to the US did not decline significantly in volume. The impact was mainly on pricing. Since negotiations were ongoing, exporters offered discounts. Market share in the US was largely retained.

Shrimp exporters actually benefited in two ways. After tariffs were imposed, they expanded exports to Europe and gained access to a large market. They have now regained the US market as well.

The interim deal framework says India intends to purchase $500 billion worth of goods from the US over the next five years. How realistic is this?

India already imports crude oil, LNG, LPG and precious metals and demand is rising. With increased steel production, demand for coking coal could double to $30 billion in five years.

India’s growing data centre ecosystem will drive demand for GPUs, ICT products, AI tools and custom computing equipment. Aircraft, engines and spare parts will also be imported on a large scale. India currently imports goods worth $300 billion annually in this category. Over the next five years, global imports are expected to reach $2 trillion, with a significant share coming from the US.

India alone may import $80–100 billion worth of aircraft-related products from the US over the next five years.

There are concerns that imports of DDGs ( dried distillers grains) and red sorghum could hurt maize farmers. How valid are these fears?

Indian farmers need not worry. DDGs are high-protein animal feed and will not replace maize. Moreover, imports are subject to a fixed quota.

We have carefully evaluated every product included in the deal. No concessions have been granted for items where domestic production is sufficient. Staples such as maize, wheat, rice, barley, jowar, bajra, flour and fruits like bananas, oranges, grapes and strawberries are not part of the deal. No dairy products — milk, paneer, butter, cheese or mozzarella — have been included.

Were maize and dairy products kept out despite US pressure?

Yes. Maize and dairy products have been completely excluded and no import concessions have been granted.

Apple farmers in Himachal Pradesh and Jammu & Kashmir are protesting. Are their concerns justified?

India’s apple demand is about 26 lakh tonnes, while domestic production is around 21 lakh tonnes. Imports of about 5.5 lakh tonnes fill the gap.

Currently, apples have a minimum import price (MIP) of Rs 50 plus a duty of Rs 25, making the landed price Rs 75 per kg. Under the US quota, the MIP is Rs 80, with an additional Rs 20 duty, raising the minimum landed price to Rs 100 per kg.

This ensures that US apples will not enter India at prices lower than Rs 100 per kg. I assure apple farmers that they will not suffer losses. Some concerns are being raised due to misinformation.

Walnut farmers in Jammu & Kashmir are also protesting.

Demand for tree nuts is rising. India currently imports tree nuts worth Rs 33,000 crore, of which Rs 10,000 crore comes from the US. Limited quotas and minor duty concessions have been provided for some items.

Has cotton been included in the deal?

Only extra-long staple (ELS) cotton, which is not produced in India, has been included. It is essential for high-quality exports. Lower import costs will benefit exporters without affecting domestic cotton farmers.

What will be the duty on basmati rice?

Basmati rice will attract an 18 percent duty under the trade deal.

What concessions have been given in the auto sector?

Limited concessions have been granted for the sector but there is no auto import from US and its not even viable. There is no demand of US auto in India. They are very costly and  local manufacturing India is far more economical. Even if they want to export auto in India, it will be more economical for them to manufacture in India.

What about wine and spirits?

Some concessions have been provided with specific conditions. India produces very little wine, involving only about 6,000 farmers and total production is valued at under Rs 1,000 crore. There is no significant cause for concern. We export wine, whisky at very large scale.