New Delhi: India and the US on Saturday reached a framework for an Interim Agreement aimed at promoting reciprocal and mutually beneficial trade. This agreement reinforces both countries’ commitment to the broader India-US-India Bilateral Trade Agreement (BTA) negotiations, launched by Prime Minister Narendra Modi and US President Donald J. Trump on February 13, 2025.
The BTA is expected to include additional market access commitments and strengthen supply chains, according to an official statement. Officials called the Interim Agreement a historic step, reflecting a shared goal of balanced trade based on mutual interests and concrete outcomes.
Under the agreement, India will reduce or eliminate tariffs on a wide range of US goods. These include industrial products, certain food and agricultural items such as dried distillers’ grains, red sorghum for animal feed, tree nuts, fresh and processed fruits, soybean oil, wine, and spirits.
The US, in turn, will maintain a reciprocal tariff of 18% on certain Indian goods, including textiles, apparel, leather products, footwear, plastics, rubber, machinery, and artisanal items.
Prime Minister Narendra Modi said the interim trade agreement with the US will strengthen ‘Make in India’ by opening up new opportunities for farmers and entrepreneurs, and create jobs for women and youngsters.
“Great news for India and USA! We have agreed on a framework for an Interim Trade Agreement between our two great nations,” Modi said in a post on X, and thanked US President Donald Trump for his personal commitment to ties between India and the US.
If the agreement is finalized, the US will remove tariffs on specific goods, including generic pharmaceuticals, gems, diamonds, and aircraft parts.
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The US will also lift certain tariffs on Indian aircraft and aircraft components imposed under past national security measures. Similarly, India will offer a preferential tariff quota for automotive parts linked to US security measures. Both countries will negotiate outcomes for generic pharmaceuticals and ingredients based on pending US investigations.
The framework emphasizes sustained preferential market access in sectors of mutual interest. It also establishes rules of origin to ensure benefits flow primarily to the US and India.
Both nations have agreed to address non-tariff barriers. India has committed to resolving long-standing obstacles to US medical devices, ICT products, and agricultural goods.
The countries will also review standards, testing procedures, and conformity assessments to facilitate smoother trade.
The framework allows either country to adjust commitments if tariffs are changed in the future. The agreement also lays the groundwork for further BTA negotiations, with the US signaling its intention to consider India’s requests for lower tariffs on Indian goods.
Both nations will cooperate to strengthen economic security, improve supply chain resilience, and encourage investment and technology cooperation. India plans to purchase USD 500 billion worth of US energy products, aircraft, precious metals, technology items, and coking coal over the next five years. T
The agreement also aims to expand trade in technology products, including GPUs and data center equipment, and promote joint innovation.
The framework addresses digital trade by committing to removing barriers and establishing clear rules for robust, mutually beneficial trade in the sector. Both countries have agreed to implement this framework quickly and work toward finalizing the Interim Agreement.
This sets the stage for a comprehensive BTA in line with the roadmap outlined in the Terms of Reference.
