India and the United States on Friday released the framework for an Interim Trade Agreement (ITA), under which the US has reduced tariffs on Indian goods by 50 percent—from 18 percent to 9 percent. The additional 25 percent tariff imposed on India for purchasing oil from Russia has also been removed.
Both countries said the framework will be implemented soon and will serve as a stepping stone toward a comprehensive Bilateral Trade Agreement (BTA). According to a joint statement, the ITA will advance the BTA negotiations that began on February 13, 2025, focusing on market access, supply chain resilience, and reduction of trade barriers.
Major Gains for Indian Exporters
Commerce Minister Piyush Goyal said the agreement will open access to a $30 trillion market for Indian exporters. He added that MSMEs, farmers, fishermen, women entrepreneurs, and youth are expected to be the biggest beneficiaries, with the deal likely to generate millions of new jobs.
India has also committed to purchasing goods worth $500 billion from the US over the next five years, including energy products, aircraft and parts, precious metals, technology products, and coking coal.
Focus on Non-Tariff Barriers
Both countries agreed to address non-tariff barriers that hinder trade. India has promised to ease regulatory hurdles for US medical devices, simplify licensing procedures for ICT products, and review the acceptance of US testing standards in selected sectors within six months of the agreement’s implementation.
Recognising US standards could eliminate duplicate testing, reduce costs, and speed up trade, benefiting both businesses and consumers.
Future Tariff Adjustments and Market Access
The framework allows both countries to revise tariffs in the future and continue negotiations to expand market access. The US has indicated it will consider further tariff reductions on Indian goods during BTA talks.
Key Benefits for India
- Reduced US tariffs on Indian exports
- Zero tariffs on select products such as generic medicines, gems and diamonds, and aircraft parts
- Special access for auto components and exemptions under Section 232
- Boost for sectors like textiles, leather, chemicals, handicrafts, and machinery
Goyal also clarified that India’s agriculture and dairy sectors remain fully protected under the agreement.