Moving a step closer to signing a Bilateral Trade Agreement (BTA), India and the United States on Saturday announced that they have reached a framework for an Interim Trade Agreement that would lower tariffs, address non-tariff barriers, and strengthen economic ties between them.
‘’Today’s framework reaffirms the countries’ commitment to the broader US-India Bilateral Trade Agreement (BTA) negotiations, launched by President Donald J Trump and Prime Minister Narendra Modi on February 13, 2025, which will include additional market access commitments and support more resilient supply chains,’’ a joint statement issued by the two countries said. The joint statement came five days after President Trump and PM Modi announced that they had reached a trade deal between their two countries.
It said the Interim Agreement will represent a historic milestone in the partnership between the two countries, demonstrating a common commitment to reciprocal and balanced trade based on mutual interests and concrete outcomes.
The joint statement suggested that under the Interim Agreement, India will eliminate or reduce tariffs on all US industrial goods and a wide range of US food and agricultural products, including dried distillers’ grains (DDGs), red sorghum for animal feed, tree nuts, fresh and processed fruit, soybean oil, wine and spirits, and additional products.
The US will apply a reciprocal tariff rate of 18 per cent on originating goods of India, including textile and apparel, leather and footwear, plastic and rubber, organic chemicals, home décor, artisanal products, and certain machinery. Subject to the successful conclusion of the Interim Agreement, the US will also remove the reciprocal tariff on a wide range of goods identified in the Potential Tariff Adjustments for Aligned Partners, including generic pharmaceuticals, gems, and diamonds.
The US will also remove tariffs on certain aircraft and aircraft parts of India imposed to eliminate threats to national security. Similarly, consistent with US national security requirements, India will receive a preferential tariff rate quota for automotive parts subject to the tariff imposed to eliminate threats to national security. Contingent on the findings of the US investigation of pharmaceuticals and pharmaceutical ingredients, India will receive negotiated outcomes with respect to generic pharmaceuticals and ingredients.
The joint statement said the US and India commit to providing each other preferential market access in sectors of respective interest on a sustained basis. They will establish rules of origin that ensure that the benefits of the Agreement accrue predominantly to both countries.
The two countries will address non-tariff barriers that affect bilateral trade. India agreed to address long-standing barriers to the trade in US medical devices; eliminate restrictive import licensing procedures that delay market access for, or impose quantitative restrictions on, US Information and Communication Technology (ICT) goods; and determine, with a view towards a positive outcome, within six months of entry into force of the Agreement whether US-developed or international standards, including testing requirements, are acceptable for the purposes of US exports entering the Indian market in identified sectors.
Recognising the importance of working together to resolve long-standing concerns, India also agreed to address long-standing non-tariff barriers to the trade in US food and agricultural products.
The joint statement said the two countries will work towards further expanding market access opportunities through the negotiations of the BTA. The US affirmed that it intends to take into consideration, during the negotiations of the BTA, India’s request that the US continue to work to lower tariffs on Indian goods.
The joint statement said India intends to purchase USD 500 billion of US energy products, aircraft and aircraft parts, precious metals, technology products, and coking coal over the next five years.