Historic India–US trade agreement: tariff relief from textiles to medicines, joint statement issued by both countries

New Delhi (The Uttam Hindu): India and the United States have issued a joint statement announcing a historic interim trade agreement framework, marking a major step forward in bilateral economic ties. The framework reflects both countries’ commitment to advancing negotiations toward a comprehensive Bilateral Trade Agreement (BTA) and has been described as a key milestone in the India–US partnership.

In the joint statement, both sides said they are pleased to have agreed on a framework for a mutually beneficial interim trade deal. The framework reaffirms the commitment made during talks launched on 13 February 2025 by US President Donald Trump and Indian Prime Minister Narendra Modi. It includes provisions for additional market access, stronger cooperation, and support for more resilient supply chains.

Under the agreement, India will eliminate or reduce tariffs on all US industrial goods and on a wide range of American food and agricultural products. These include dried distillers grains (DDGs), red sorghum used as animal feed, tree nuts, fresh and processed fruits, soybean oil, wine, spirits, and other products.

In return, the United States will apply an 18 percent reciprocal tariff rate on selected Indian-origin goods. These include textiles and apparel, leather and footwear, plastics and rubber products, organic chemicals, home décor items, handicrafts, and certain categories of machinery.

According to the framework, successful implementation of the interim deal will also pave the way for tariff removal on a broader range of Indian products. This list includes generic medicines, gems and diamonds, and aircraft components—sectors where India has a strong global presence and US demand is high. Washington has also agreed to remove tariffs on certain Indian aircraft and aircraft parts, which were earlier imposed under national security measures related to aluminium, steel, and copper imports.

India will also receive preferential tariff treatment for automotive components, which currently fall under US national security tariffs on automobiles and auto parts. The agreement could further benefit India’s pharmaceutical sector, particularly in the area of generic drugs and pharmaceutical inputs. However, outcomes in this segment will depend on the results of the ongoing US Section 232 investigation. These products remain a major part of India’s exports to the US healthcare market.

Beyond tariffs, both countries have agreed to provide priority market access in select areas and to establish rules of origin to ensure that the benefits of the agreement primarily accrue to India and the United States. The two sides will also address non-tariff barriers affecting bilateral trade. India has agreed to resolve long-standing issues related to US medical device exports.

Additionally, both nations agreed to eliminate restrictive import licensing procedures that have delayed market access for US information and communication technology (ICT) products. India has committed to deciding within six months of implementation whether US or international standards can be accepted in identified sectors, including testing requirements. Similar commitments apply to long-pending barriers affecting US food and agricultural exports.

The agreement emphasizes joint efforts to resolve long-standing concerns. India has agreed to work on removing non-tariff barriers in the trade of US food and agricultural products. Both sides have also agreed that if either country changes its tariffs in the future, the other may review and adjust its commitments accordingly.

Under the deal, India and the United States will continue efforts to expand market access opportunities through ongoing BTA negotiations. The US has confirmed that it will consider India’s request to continue reducing tariffs on Indian goods as part of these discussions.