India and the United States have reached an interim trade framework, poised to significantly boost Indian exports by opening access to a $30 trillion market. Union Commerce and Industry Minister Piyush Goyal, who was closely involved in the negotiations, hailed the agreement as a landmark achievement. He emphasized that it would particularly benefit Micro, Small, and Medium Enterprises (MSMEs), farmers, and fishermen, while also creating numerous employment opportunities for women and youth across the country.
The interim agreement marks a significant step towards a broader U.S.-India Bilateral Trade Agreement (BTA), which was initially launched on February 13, 2025, by President Donald Trump and Prime Minister Narendra Modi. Both countries are committed to promptly implementing this framework and working towards finalizing the interim agreement, with the ultimate goal of establishing a mutually beneficial BTA. The framework solidifies their dedication to strengthening economic and trade ties and fostering more resilient supply chains.
Under the terms of the interim agreement, India will eliminate or reduce tariffs on all U.S. industrial goods and a wide array of agricultural products. These products include dried distillers' grains, red sorghum for animal feed, tree nuts, fresh and processed fruits, soybean oil, wine, and spirits. In return, the United States will lower its reciprocal tariff rate to 18% on Indian exports. This is a significant reduction from previous rates, with President Trump also issuing an executive order rescinding the additional 25% tariffs that were earlier imposed on India for its purchase of Russian oil. Subject to the finalization of the agreement, the U.S. will eliminate tariffs on select Indian products, including generic pharmaceuticals, gems and diamonds, and aircraft parts.
The White House released a joint statement emphasizing the commitment of both countries to providing preferential market access in sectors of respective interest on a sustained basis. Ambassador Greer issued a statement highlighting that the agreement would remove tariff and non-tariff barriers, opening India's market of over 1.4 billion people to American products. He also thanked Minister Goyal for his leadership and commitment to achieving fair and balanced trade with the United States.
The reduction in tariffs is expected to improve market access for Indian exporters. The surge in exports is also expected to generate lakhs of new employment opportunities for women and youth in India.
Piyush Goyal clarified that the agreement does not involve fresh investment pledges from India. Instead, it focuses on trade and sourcing from the U.S. that aligns with India's growth needs in the coming years. He stated that India's rapid growth necessitates large volumes of energy, data center equipment, and ICT products, estimating potential imports from the U.S. to be at least $500 billion over the next five years. This includes potential orders of Boeing aircraft and related parts, which could reach $100 billion.
Prime Minister Modi welcomed the agreement, highlighting its potential to strengthen economic ties, boost domestic manufacturing, and create jobs. He also thanked President Trump for his personal commitment to robust ties between the two countries.
The interim trade agreement signifies a reset in trade relations between India and the U.S., setting the stage for a more comprehensive bilateral trade deal amid evolving geopolitical dynamics.