India and the US have agreed on a framework for an interim trade deal that focuses on reciprocal and mutually beneficial trade. This agreement will involve additional market access commitments and the promotion of resilient supply chains. As part of this pact, the US will lift tariffs on specific aircraft and aircraft parts from India, which were initially imposed due to national security concerns outlined in Proclamation 9704 of March 8, 2018.
Consistent with US national security needs, India will be granted a preferential tariff rate quota for automotive parts that are subject to tariffs imposed to address national security threats as per Proclamation 9888 of May 17, 2019. The joint statement also mentions that India will receive negotiated outcomes concerning generic pharmaceuticals and ingredients based on the findings of the US Section 232 investigation of pharmaceuticals and pharmaceutical ingredients.
India has committed to reducing or eliminating tariffs on a variety of US industrial goods and a broad range of US food and agricultural products. This includes items such as dried distillers’ grains (DDGs), red sorghum for animal feed, tree nuts, fresh and processed fruit, soybean oil, wine and spirits, among others. The US will now impose a reciprocal tariff rate of 18 percent on goods originating from India, including textile and apparel, leather and footwear, plastic and rubber, organic chemicals, home décor, artisanal products, and specific machinery, under Executive Order 14257 of April 2, 2025.
According to the statement, upon the successful conclusion of the Interim Agreement, the US will eliminate reciprocal tariffs on various goods identified in the Potential Tariff Adjustments for Aligned Partners Annex to Executive Order 14346 of September 5, 2025. This includes generic pharmaceuticals, gems and diamonds, and aircraft parts. Both countries have pledged to offer each other preferential market access in sectors of mutual interest on a continuous basis. Additionally, India has agreed to address long-standing non-tariff barriers to trade in US food and agricultural products.
India has expressed its intention to procure $500 billion worth of US energy products, aircraft and aircraft parts, precious metals, technology products, and coking coal over the next five years.
