India and the United States have agreed on a framework for an interim trade agreement that outlines tariff cuts, preferential market access and sector-specific commitments, while preserving protections for sensitive areas such as agriculture and dairy. The framework, announced jointly on Saturday, is intended to pave the way for a broader Bilateral Trade Agreement (BTA).
According to the joint statement, the interim agreement reaffirms the two countries’ commitment to “reciprocal and mutually beneficial trade” and aims to support more resilient supply chains.
"The US and India are pleased to announce that they have reached a framework for an Interim Agreement regarding reciprocal and mutually beneficial trade," the joint statement said.
Simultaneously, US President Donald Trump has also signed an executive order revoking the 25% tariffs that had been imposed on India for its purchase of crude oil from Russia.
The interim trade pact, expected to be signed by mid-March, is aimed at easing trade tensions and providing relief to Indian exporters after months of uncertainty.
Sector wise key terms
Manufacturing and industrial goods
A key outcome of the framework is tariff relief for Indian manufacturing exports. The United States will apply a reciprocal tariff rate of 18% on Indian-origin goods – a sharp reduction from earlier levels.
It covers sectors such as:
- Textiles and apparel,
- Leather and footwear,
- Plastic and rubber products,
- Organic chemicals,
- Home décor, artisanal products and
- Select machinery.
India, in turn, has committed to eliminating or reducing tariffs on all US industrial goods.
Commerce and industry minister Piyush Goyal said the framework would “open a $30 trillion market for Indian exporters, especially MSMEs,” adding that the tariff reduction would create new export and employment opportunities.
Agriculture: Market access with safeguards
India has agreed to reduce or eliminate tariffs on a range of US agricultural and food products, including dried distillers’ grains (DDGs), red sorghum for animal feed, tree nuts, fresh and processed fruits, soybean oil, wine and spirits.
However, the government stressed that sensitive agricultural and dairy products remain fully protected. “No concessions have been extended to sensitive agricultural sector produce in grains, fruits, vegetables, spices, oilseeds, dairy, poultry, & meat,” Goyal said, adding that farmers’ interests “remain paramount in all trade negotiations.”
The interim deal brings broader commercial benefits, but protections for core food and farm products signal that India will not compromise on the economic backbone of its rural economy.
“The agreement reflects India's commitment to safeguarding farmers' interests and sustaining rural livelihoods by completely protecting sensitive agricultural and dairy products, including maize, wheat, rice, soya, poultry, milk, cheese, ethanol (fuel), tobacco, certain vegetables, meat, etc," Piyush Goyal highlighted.
Pharmaceuticals and medical devices
The framework provides for the removal of reciprocal tariffs on a wide range of Indian generic pharmaceuticals, subject to the successful conclusion of the interim agreement. Outcomes related to pharmaceutical ingredients will depend on the findings of a US Section 232 investigation.
India will also receive negotiated outcomes for generics and ingredients, while agreeing to address long-standing non-tariff barriers affecting US medical devices, including regulatory and market access issues.
Automobiles, aircraft and heavy industry
India will receive a “preferential tariff-rate quota” for automotive parts currently subject to US national security tariffs under Section 232.
In aviation, the US will remove tariffs on certain Indian aircraft and aircraft parts imposed under earlier aluminium, steel and copper import proclamations.
The agreement also signals expanded purchases of US aircraft and aircraft parts by India.
Technology, digital trade and energy
Both sides have committed to expanding trade in technology products, including graphics processing units (GPUs) and data centre-related equipment, and to deepening cooperation in technology and innovation.
India has indicated it intends to purchase $500 billion worth of US energy products, aircraft, precious metals, technology products and coking coal over the next five years.
The framework also outlines plans to address barriers to digital trade and develop “robust, ambitious, and mutually beneficial digital trade rules” as part of the BTA.
Supply chains and standards
The two countries will work to strengthen economic security and supply chain resilience, including cooperation on non-market policies of third parties, investment screening and export controls. They will also discuss standards and conformity assessment procedures to ease compliance for exporters.
Prime Minister Narendra Modi said the framework “reflects the growing depth, trust and dynamism of our partnership” and would strengthen ‘Make in India’ while generating large-scale employment. “As India moves forward towards building a Viksit Bharat, we remain committed to building global partnerships that are future-oriented,” he said in a post on X.
The interim framework will be implemented promptly, with both sides aiming to conclude a comprehensive Bilateral Trade Agreement in line with an agreed roadmap.