India-US Interim Trade Deal: A major, historic trade agreement has been finalised between India and the United States. On Saturday, the two countries agreed on the framework of an Interim Trade Agreement. This agreement is a major outcome of negotiations between Prime Minister Narendra Modi and US President Donald Trump that began in February 2025. According to a joint statement, the agreement aims to balance trade between the two countries and strengthen the supply chain.
How much tax will be levied on which goods?
According to the joint statement, the US will now impose an 18 percent reciprocal tariff on most goods manufactured in India. This includes textiles, footwear, leather, plastics, rubber, organic chemicals, home decor items, handicrafts, and some machinery.
However, the silver lining is that once this interim deal is fully implemented, the US will remove tariffs on Indian goods, including generic pharmaceuticals, diamonds, jewellery, and aircraft parts.
What concessions will India have to provide?
Under the terms of the agreement, India will either eliminate or significantly reduce taxes on all industrial goods imported from the US. Additionally, it will reduce duties on food items such as tree nuts, fresh and processed fruits, soybean oil, wine, and spirits.
Red sorghum and dried grains for animal feed. India has also pledged to purchase goods worth $500 billion (approximately Rs. 42 lakh crore) from the US over the next five years. This will include energy products, aircraft parts, precious metals, and data centre equipment.
New Update on Steel, Aluminium, and Pharmaceuticals
The statement said that certain taxes on Indian aircraft parts will be removed due to US national security regulations on steel and aluminium. India will be granted a special quota for auto parts. Taxes on pharmaceuticals will be reviewed.
Removing Barriers to Trade
According to the report, India will also remove long-standing barriers that hinder the import of US medical devices, IT (ICT) goods, and agricultural products. Over the next six months, the two countries will work together on international standards and testing regulations to facilitate trade.
Targeting China and Digital Trade
A major objective of this deal is to secure the supply chain and counter the policies of countries that adopt ‘non-market’ practices (a reference to China). The two countries have also agreed to establish new rules for digital trade and expand trade in data centre-related technology (such as GPUs).
According to the joint statement, this framework will be implemented immediately. This is an interim agreement, meaning the two countries will soon finalise it to establish a full-fledged Bilateral Trade Agreement. This will usher in a new era of trade and friendship between the two countries.
