New Delhi, February 7: The interim framework of the India-U.S. trade deal has been unveiled, promising significant market access and opportunities for exporters from both nations. This information was shared by industry insiders on Saturday.
Under this interim framework, the U.S. has reduced tariffs on Indian exports from 50% to 18%. This reduction is expected to benefit India’s textile, leather, and engineering goods sectors.
Rajeev Juneja, President of PHDCCI, stated, “This agreement marks a consensus in ongoing discussions aimed at promoting bilateral trade and laying the groundwork for a comprehensive Bilateral Trade Agreement (BTA).”
As per the terms of the interim agreement, the U.S. will apply an 18% tariff rate on Indian-origin goods, including textiles, apparel, leather and footwear, plastics and rubber, organic chemicals, home decor items, handicrafts, and certain machinery.
Juneja also mentioned that with the successful implementation of the interim agreement and its finalization, there is a possibility of tariff elimination on specific Indian export categories, particularly generic medicines, gems and diamonds, and aircraft parts.
Additionally, the U.S. will remove some national security-related tariffs already imposed on Indian aircraft and aircraft parts under steel, aluminum, and copper measures.
The reduction in tariffs is expected to enhance access for Indian generic drug manufacturers to the U.S. market. The gems and jewelry sector is anticipated to benefit from increased exports from India’s cutting and polishing industry, leading to higher profits and export volumes.
Eliminating tariffs on aircraft and aircraft parts will support India’s emerging aerospace manufacturing, maintenance, repair, and overhaul (MRO) sectors, along with the component supply chain.
PHDCCI noted, “The implementation of lower reciprocal tariff rates will enhance the competitiveness of Indian textile and apparel exporters in the U.S. market, particularly in labor-intensive sectors.”
Reducing trade barriers will also support exports of industrial machinery, auto components, and metal products, while organic chemicals, plastics, and rubber products will benefit from improved price competitiveness and expanded market reach.
The improved tariff structure and stable access to the U.S. consumer market are expected to benefit handicraft products, home decor, and lifestyle items.
Dr. Ranjit Mehta, CEO and Secretary General of PHDCCI, remarked, “This interim tariff agreement is a significant step in U.S.-India trade relations, likely expanding market access for exporters from both countries and establishing a stable and comprehensive trade framework.”
