New Delhi, February 7: India and the United States have issued a joint statement regarding a trade agreement. The two nations have outlined a framework for an interim agreement, reflecting their commitment to comprehensive bilateral trade agreement (BTA) negotiations. Both countries stated that this interim agreement will mark a historic milestone in their partnership.
The joint statement expressed, “The United States and India are pleased to announce that they have agreed on a framework for mutually beneficial trade (interim agreement). This framework reaffirms the countries’ commitment to the discussions initiated by President Donald Trump and Prime Minister Narendra Modi on February 13, 2025, which will include additional market access commitments and support for more flexible supply chains.”
The joint statement also provided details about the key terms of the interim agreement.
According to the agreement, India will eliminate or reduce tariffs on all industrial goods from the US and various food and agricultural products, including dried distillers grains (DDGS), red sorghum for animal feed, tree nuts, fresh and processed fruits, soybean oil, wine, spirits, and others.
In return, the US will apply a reciprocal tariff rate of 18 percent on Indian goods, which includes textiles and apparel, leather and footwear, plastics and rubber, organic chemicals, home decor items, handicrafts, and certain machinery.
The framework ensures that the success of the interim agreement will pave the way for the removal of tariffs on a wide range of Indian goods. This list includes generic medicines, gems and diamonds, and aircraft parts—areas where India has a strong global presence and high US demand. The statement noted that Washington will also eliminate tariffs on certain Indian aircraft and parts, which were previously imposed under national security declarations related to aluminum, steel, and copper imports.
Additionally, it has been agreed that India will receive special preferential tariff arrangements for automotive parts, which fall under US national security tariffs on automobiles and auto parts. India’s pharmaceutical industry may benefit further, with outcomes related to generic drugs and pharmaceutical materials depending on the US Section 232 investigation. According to the joint statement, these products are India’s main exports to the US healthcare market.
Beyond tariffs, both countries have agreed to grant each other priority market access in key sectors. The US and India will establish origin rules to ensure that the benefits of the agreement primarily accrue to both nations. Furthermore, they will address non-tariff barriers affecting bilateral trade. India has agreed to resolve longstanding barriers in the trade of US medical devices.
Both nations have agreed to eliminate restrictive import licensing processes that have delayed market access for US information and communication technology (ICT) goods. India has committed to determining within six months of the agreement’s implementation whether US or international standards can be accepted in identified sectors, including testing requirements. Similar commitments apply to longstanding barriers affecting US food and agricultural products.
The agreement prioritizes the importance of working together to resolve long-standing concerns. Accordingly, India has also agreed to address non-tariff barriers in the trade of US food and agricultural products. In the event of any changes to tariffs by either country, the US and India agree that the other country may revise its commitments.
Under the deal, the US and India will work to further expand market access opportunities through bilateral trade agreement negotiations. The US has also confirmed its intention to consider India’s request to continue working on reducing tariffs on Indian goods during the negotiations for the bilateral trade agreement.