India and the US have unveiled an interim trade framework, signaling a significant step towards a broader, more comprehensive trade agreement. This development, announced on February 6, 2026, follows discussions between U.S. President Donald Trump and Indian Prime Minister Narendra Modi, which began on February 13, 2025, and reflects a shared commitment to fair, balanced trade, improved market access, and more resilient supply chains.
The interim agreement outlines key terms aimed at fostering a mutually beneficial trade relationship. India is set to eliminate or reduce tariffs on all U.S. industrial goods, as well as a wide array of food and agricultural products, including items like dried distillers' grains (DDGs), red sorghum for animal feed, tree nuts, fresh and processed fruits, soybean oil, wine, and spirits. In return, the United States will implement a reciprocal tariff rate of 18 percent on goods originating from India. This covers sectors such as textiles and apparel, leather and footwear, plastics and rubber, organic chemicals, home decor, handicrafts, and certain machinery.
Furthermore, the United States may remove reciprocal tariffs on a variety of Indian goods, such as generic pharmaceuticals, gems and diamonds and aircraft parts, pending the successful conclusion of the interim agreement. Washington has also agreed to lift certain national security-related tariffs on Indian aircraft and aircraft parts that were previously imposed on aluminum, steel and copper. India will also receive a preferential tariff quota for automotive parts exported to the US.
As part of this framework, India intends to purchase $500 billion worth of U.S. goods over the next five years. These purchases will include energy products, aircraft and aircraft parts, precious metals, technology products, and coking coal. There will also be a significant increase in trade of technology products, including Graphics Processing Units (GPUs) and other goods used in data centers, along with expanded joint technology cooperation.
The announcement of this interim agreement was preceded by President Trump stating that the U.S. would reduce tariffs on Indian goods from 50% to 18%. This decision followed India's agreement to shift its oil imports to the United States and Venezuela and stop buying Russian oil. Half of the earlier 50% tariff had been imposed as a penalty for India's purchases of Russian crude.
India's Commerce Secretary, Rajesh Agrawal, anticipates that the agreement will be signed by mid-March 2026, providing India with the legal foundation to reduce import duties on US goods. Commerce Minister Piyush Goyal said the move will open a $30 trillion market for Indian exporters. He added that India is committed to protecting its farmers, therefore sensitive agricultural and dairy products have been completely protected.
Analysts suggest that the reduction in tariffs from 50% to 18% will directly improve price competitiveness and order conversion for Indian capital goods and industrial companies already operating in the U.S. market. The agreement could provide a competitive edge over Asian countries with higher tariff rates, expanding opportunities in a large market.
This interim agreement marks a significant step in strengthening the economic partnership between India and the United States, paving the way for a more comprehensive trade deal in the future.