From aircraft to wine, what's the complete framework of India-US interim trade deal in 12 points | EXPLAINED
After assuming power in the United States, Donald Trump began making major decisions on the economic front. The US President began imposing additional duties on goods imported from various countries based on reciprocal tariffs.
From aircraft to wine, what's the complete framework of India-US interim trade deal in 12 points | EXPLAINED
India-US Trade Deal: Following the trade deal between India and the United States, both countries have pledged to work together on economic and strategic fronts. Now, the two countries have made the terms of the deal public. Significantly, dairy is not mentioned in it. This means that India has successfully excluded dairy from the trade deal. Furthermore, there are several other provisions that will benefit both countries. A framework for an interim agreement has been established. This structure reaffirms both countries' commitment to the comprehensive US-India Bilateral Trade Agreement (BTA) negotiations launched by President Donald Trump and Prime Minister Narendra Modi on February 13, 2025, which will include additional market access and support for a more robust supply chain. This interim agreement between the US and India will be a historic milestone in the two countries' partnership, reflecting a shared commitment to reciprocal and balanced trade based on mutual interests and concrete results.
Announcing this trade deal, Trump wrote on Truth Social that in exchange for an 18% tariff, India would stop importing oil from Russia, there would be zero tariffs on American goods in the Indian market, and India would buy US products worth $500 billion. Experts believe that after this deal, India's labor-intensive export sectors like textiles, leather, jewellery, toys and furniture will get a boost in the US market. The 18% tariff rate is likely to benefit small and medium-sized companies, as it is lower than the 19% rate in rival Pakistan. Vietnam and Bangladesh are subject to 20% tariffs.
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The provisions of the interim agreement prepared by India and US are as follows -:
- India will eliminate or reduce tariffs on all US industrial goods and also reduce tariffs on a wide range of US food and agricultural products, including dried distillers grains (DDGs), red sorghum for animal feed, nuts, fresh and processed fruits, soybean oil, wine and spirits, among other products.
- The United States will impose an 18 percent reciprocal tariff rate on products from India under Executive Order 14257 (Regulating Imports Under Reciprocal Tariffs to Correct Trade Practices Contributing to Large and Persistent Annual U.S. Merchandise Trade Deficits) dated April 2, 2025. This includes textiles, leather, and footwear, plastics and rubber, organic chemicals, home decor, handicraft products, and certain machinery. Furthermore, subject to the successful conclusion of an interim agreement, reciprocal tariffs will be removed on several items, including generic drugs, gemstones and diamonds, and aircraft parts, as amended under Executive Order 14346 (Revising the Scope of Reciprocal Tariffs and Establishing Procedures for Implementing Trade and Security Agreements) dated September 5, 2025.
- The United States will remove tariffs on certain aircraft and aircraft parts imported from India, which were imposed under Proclamation 9704 (Adjustment of Aluminum Imports into the United States) dated March 8, 2018, Proclamation 9705 (Adjustment of Steel Imports into the United States) dated March 8, 2018, and Proclamation 10962 (Adjustment of Copper Imports into the United States) dated July 30, 2025, to eliminate identified national security threats. Similarly, consistent with U.S. national security requirements, India will receive concessional tariff rate quotas for automobile parts subject to the tariffs imposed under Proclamation 9888 (Adjustment of Automobile and Automobile Parts Imports into the United States) dated May 17, 2019. Furthermore, based on the findings of the U.S. Section 232 investigation into drugs and pharmaceutical ingredients, India will receive benefits with respect to generic drugs.
- The United States and India are committed to providing each other with priority market access on a sustainable basis in areas of mutual interest.
- The United States and India will establish rules of origin that ensure that the benefits of the agreement accrue primarily to the United States and India.
- The United States and India will work to address non-tariff barriers affecting bilateral trade. India agreed to address long-standing barriers to trade in U.S. medical devices, eliminate stringent import licensing processes that delay market access or impose quantitative restrictions on U.S. information and communications technology (ICT) products, and determine whether American-made or international standards, including testing requirements, are acceptable for U.S. exports entering the Indian market in identified sectors, with the aim of achieving a positive outcome within six months of the agreement's entry into force. Recognizing the importance of working together to address long-standing concerns, India also agreed to address non-tariff barriers to trade in U.S. food and agricultural products.
- With a view to facilitating compliance with applicable technical regulations, the United States and India intend to discuss their respective standards and conformity assessment processes for mutually agreed areas.
- If there are any changes to tariffs imposed by either country, the United States and India agree that the other country may revise its commitments.
- The United States and India will work to further expand market access opportunities through negotiations. The United States has also confirmed that it will consider India's request to reduce tariffs on Indian goods during the BTA negotiations.
- India and the United States have agreed to strengthen economic security coordination to promote supply chain resilience and innovation, including through complementary measures to address third-party non-market practices, and to cooperate on inbound and outbound investment reviews and export controls.
- India intends to purchase $500 billion in energy products, aircraft and aircraft parts, precious metals, technology products, and coking coal from the United States over the next five years. India and the United States will significantly increase trade in technology products, including graphics processing units (GPUs) used in data centers, and expand joint technical cooperation.
- India and the United States are committed to eliminating discriminatory or burdensome practices and other barriers to digital trade and agree to set a clear path to achieving strong, ambitious, and mutually beneficial digital trade rules under the BTA.
Experts believe that after this deal, India's labor-intensive export sectors like textiles, leather, jewellery, toys and furniture will get a boost in the US market. ALSO READ | US, India unveil interim trade framework: What benefits will India get?
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