The recent announcement of an interim trade agreement framework between India and the United States signals a significant step towards strengthening economic ties and boosting the ‘Make in India’ initiative. The agreement, coming after months of negotiations and trade tensions, represents a reset in bilateral trade relations and sets the stage for a more comprehensive trade deal in the future.
Under the terms of the interim agreement, the United States will reduce tariffs on Indian exports from 50 percent to 18 percent. In return, India is expected to lower duties on certain U.S. goods, including industrial and farm products. This reciprocal arrangement aims to provide preferential market access to both nations in sectors of mutual interest. Both countries have also committed to strengthening supply chains and digital trade.
A joint statement released by the White House early Saturday reaffirmed the commitment of both nations to the broader India-US Bilateral Trade Agreement (BTA) negotiations, which were initially launched by Prime Minister Narendra Modi and former U.S. President Donald Trump in February 2025. The two countries said they would promptly implement this framework and work toward finalizing the interim agreement, with the goal of concluding a mutually beneficial BTA. The framework, they said, reaffirms their commitment to deepening economic and trade ties.
In addition to tariff reductions, India has indicated its intention to purchase goods worth $500 billion from the United States over the next five years. These purchases are expected to include U.S. energy products, aircraft and aircraft parts, precious metals, technology products, and coking coal. The two countries also plan to significantly expand trade in technology products such as graphics processing units (GPUs) and other equipment used in data centers, alongside deeper joint cooperation in critical technologies.
Moreover, India will eliminate or reduce tariffs on all U.S. industrial goods and a wide range of U.S. food and agricultural products, including dried distillers' grains (DDGs), red sorghum for animal feed, tree nuts, fresh and processed fruit, soybean oil, wine and spirits, and additional products.
The U.S. President separately issued an executive order rescinding 25% additional tariffs for India's purchase of Russian oil, stating that India has committed to stop importing Russian oil and buy more U.S. energy products. The order warns that the tariffs would be reimposed if India "resumes" Russian oil imports.
The India-US trade deal marks a reset in trade ties and setting the stage for a sweeping bilateral deal amid geopolitical recalibrations. The signing of a joint statement is expected between February 11 and 13.