Washington is considering further tariff reductions for India following the establishment of an interim trade framework between the two nations. This consideration comes after the United States and India reached a significant breakthrough in trade negotiations, resolving nearly a year of trade tensions.
The interim agreement framework solidifies the commitment of both countries to broader India-US Bilateral Trade Agreement (BTA) negotiations, which were initiated in February 2025 by Prime Minister Narendra Modi and then U.S. President Donald Trump. As part of this framework, Washington has indicated it will consider India's requests for further tariff cuts on Indian goods as discussions progress.
Under the interim agreement, India has agreed to eliminate or significantly reduce tariffs on all U.S. industrial goods and a broad range of American food and agricultural products. These products include dried distillers' grains (DDGs), red sorghum used for animal feed, tree nuts, fresh and processed fruits, soybean oil, as well as wine and spirits. In return, the United States will apply a reciprocal tariff rate of 18 per cent on Indian-origin goods. These goods include textiles and apparel, leather and footwear, plastics and rubber, organic chemicals, home décor, artisanal products, and certain categories of machinery.
Earlier in the week, President Trump announced the U.S. would cut tariffs on Indian goods from 50% to 18% as part of the trade deal, in exchange for India halting purchases of Russian oil and lowering trade barriers. Half of the 50% tariff had been imposed as a measure against India's Russian oil imports, which Trump said were supporting Moscow's war effort in Ukraine. On Friday, Trump signed an executive order removing the 25% portion of the tariff after India agreed to shift oil imports to the U.S. and Venezuela.
Both sides have also agreed to strengthen alignment on economic security to improve supply chain resilience and boost innovation. This includes coordinated steps to counter non-market policies of third countries, as well as closer cooperation on inbound and outbound investment screening and export controls.
According to a joint statement from both governments, further negotiations will be necessary to finalize a comprehensive bilateral trade agreement, even with the framework setting a clear path. India has also agreed to address long-standing non-tariff barriers on agricultural products, medical devices, and communications equipment. Both countries aim to finalize an agreement within six months that recognizes U.S. or international safety and licensing standards for imported products.
Indian Trade Minister Piyush Goyal welcomed the India-US framework, describing it as opening access to the $30 trillion U.S. market for Indian exporters, which would particularly benefit farmers, fishermen, and micro, small, and medium enterprises. Goyal also suggested that the formal trade agreement could be signed by March, after which India's tariff cuts on U.S. exports would take effect.
Negotiations for a full trade agreement have faced challenges over agriculture, digital trade, medical devices, and market access. Strategic concerns, including competition with China, supply chain diversification, and energy security, have added urgency to the India-US trade deal, officials have stated.