India and the United States have announced a framework for an interim trade agreement that will lower US tariffs on Indian goods to 18 per cent, a move Prime Minister Narendra Modi on Saturday said would deepen bilateral ties and boost jobs, exports and manufacturing at home.
Welcoming the announcement, PM Modi said the framework reflected the “growing depth, trust and dynamism” of the India-US partnership and would strengthen the ‘Make in India’ programme by opening new opportunities for farmers, start-ups, MSMEs, and fishermen. The agreement, finalised between India and Washington, comes amid ongoing negotiations for a broader Bilateral Trade Agreement (BTA) and signals a push to stabilise trade flows and supply chains.
What the interim trade framework means for India and the US
Posting on X, PM Modi described the development as “great news for India and USA” and thanked US President Donald Trump for his “personal commitment to robust ties” between the two countries. He said the framework would generate large-scale employment for women and young people while deepening investment and technology partnerships.
Union Commerce and Industry Minister Piyush Goyal said the agreement would help India and the US stay focused on expanding economic cooperation and sustainable growth. According to him, the framework opens access to a USD 30 trillion market for Indian exporters, especially MSMEs, farmers and fishermen, and could create lakhs of new jobs.
Under the framework, the US will reduce reciprocal tariffs on Indian-origin goods to 18 per cent across key sectors such as textiles and apparel, plastic and rubber products, leather and footwear, home décor, artisanal products, organic chemicals, and select machinery. Tariffs will also be cut to zero on a range of items, including gems and diamonds, generic pharmaceuticals, and aircraft parts, enhancing India’s export competitiveness.
India is set to receive exemptions under Section 232 on aircraft parts, a preferential tariff rate quota on automotive parts and negotiated outcomes on generic pharmaceuticals. Washington will also remove duties imposed earlier on certain Indian aircraft and aircraft parts under national security-related proclamations linked to aluminium, steel and copper imports.
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Safeguards for agriculture, next steps in BTA talks
Goyal said the framework protects India’s sensitive agricultural and dairy sectors, with tariffs maintained on products such as rice, soya, poultry, maize, wheat, milk, cheese, certain vegetables, ethanol (fuel), tobacco, and meat to safeguard farmers’ interests and rural livelihoods.
A joint statement issued earlier said that subject to the successful conclusion of the interim agreement, the two sides would work towards removing tariffs on a wider range of goods and addressing non-tariff barriers affecting bilateral trade. Both countries also committed to enhancing cooperation on standards, conformity assessments and supply chain resilience, and to strengthening economic security alignment.
Union Finance Minister Nirmala Sitharaman welcomed the framework, reiterating India’s commitment to negotiating the broader BTA. She said the interim agreement marked a step towards reciprocal and mutually beneficial trade.
However, the announcement has drawn political scrutiny. Congress leader Manish Tewari questioned the wording of the joint statement, arguing that references to eliminating or reducing tariffs on all US industrial goods and a wide range of agricultural products warranted a full parliamentary discussion due to their potential implications.
“This merits a full-fledged discussion in Parliament on what exactly has been agreed to by the Government of India, for it has seemingly portentous implications given the huge unilateral concessions across multiple tariff lines that already have been given by India in the Finance Bill of 2026.”
Both sides have said they will promptly implement the framework and work towards finalising the interim agreement, with the stated aim of concluding a comprehensive Bilateral Trade Agreement in line with the agreed roadmap.