The recently announced interim trade agreement framework between India and the United States is poised to reshape bilateral commerce, with significant implications for various sectors in both economies. Signed on February 7, 2026, the agreement entails tariff reductions and increased market access, paving the way for a more comprehensive Bilateral Trade Agreement (BTA). Here's a breakdown of the sectors expected to benefit the most:

For India:

• Textiles and Apparel: The U.S. will apply a reciprocal tariff rate of 18% on Indian goods, including textiles and apparel. While not a complete elimination, this is a significant reduction from the earlier tariff rate of 50%, offering Indian exporters a more competitive edge in the U.S. market.
• Gems and Jewelry: Subject to the successful conclusion of the interim agreement, the U.S. will remove reciprocal tariffs on gems and diamonds from India. This will provide a boost to India's gems and jewelry sector, a significant contributor to its export earnings.
• Pharmaceuticals: The U.S. will eliminate tariffs on generic pharmaceuticals from India upon the interim agreement's successful conclusion. This will enhance the competitiveness of Indian generic drug manufacturers in the U.S., a crucial market for affordable medicines.
• Aircraft Parts: The U.S. will remove tariffs imposed on Indian aircraft and aircraft parts under earlier national security proclamations. The removal of national security tariffs on aircraft parts will encourage investment and technology partnerships between the two countries.
• Make in India Initiative: The reduction in tariffs and the commitment to remove them on certain goods is expected to enhance India's export competitiveness and boost the "Make in India" campaign.

For the United States:

• Agriculture: India will eliminate or reduce tariffs on a wide range of U.S. food and agricultural products. This includes items like dried distillers' grains (DDGs), red sorghum for animal feed, tree nuts, fresh and processed fruits, and soybean oil. This will grant U.S. farmers and producers greater access to the Indian market.
• Energy: India intends to purchase $500 billion worth of U.S. energy products over the next five years, including oil and gas. This commitment strengthens the energy partnership between the two countries and provides a stable market for U.S. energy producers.
• Aerospace: As part of the $500 billion purchase agreement, India will buy aircraft and aircraft parts from the U.S.. This will support jobs in the U.S. aerospace industry and deepen technological collaboration.
• Technology: India's commitment includes purchasing technology products, such as graphics processing units (GPUs) used for AI and data centers, from the U.S.. This fosters collaboration in emerging technologies and supports U.S. tech companies.
• Industrial Goods: India will eliminate or reduce tariffs on all U.S. industrial goods. This will provide a broader market for American manufacturers in India.

Overall Benefits:

The interim trade agreement is expected to create new job opportunities, strengthen supply chains, and contribute to global growth. It also reaffirms the commitment of both countries to a broader U.S.-India Bilateral Trade Agreement, which could further enhance trade and investment ties.

Points to Note:

• The interim agreement is a framework, and further negotiations are needed to finalize the details.
• The successful conclusion of the interim agreement is subject to both countries fulfilling their commitments.
• Some political opposition exists, with concerns raised about the deal being more of an "order" from the U.S..

Despite these points, the interim trade agreement represents a significant step forward in strengthening economic ties between India and the U.S., with potential benefits for a wide range of sectors in both countries.