The United States and India have unveiled a framework for an Interim Agreement on trade, aiming to progress towards a broader bilateral trade deal. This move includes a reduction in the tariff on Indian imports from 25% to 18%, as confirmed by the White House. The agreement, initiated by President Donald J. Trump and Prime Minister Narendra Modi in 2025, seeks to enhance trade relations.
This Interim Agreement signifies a significant milestone in the partnership between the US and India, emphasizing balanced and reciprocal trade based on shared interests and tangible outcomes. The deal is structured to yield early benefits and bolster more resilient supply chains, as per officials. Trump recently announced a trade deal with Modi, focusing on reciprocity, expanded market access, and addressing trade imbalances.
Under the agreement, India will cut or eliminate tariffs on various US industrial goods and a wide array of American food and agricultural products. In return, the US will impose an 18% reciprocal tariff on Indian goods to tackle trade deficits. The framework also outlines plans to remove tariffs on specific goods for aligned partners if the Interim Agreement is successfully finalized.
The agreement further addresses non-tariff barriers, with India committing to resolving obstacles hindering US medical devices and streamlining import licensing procedures for US technology products. Both nations have agreed to provide preferential market access in key sectors and establish rules of origin to ensure mutual benefits. Additionally, cooperation on standards, digital trade, and economic security is outlined, with India planning to procure $500 billion worth of US products over the next five years.
