India-US interim trade framework explained in 10 points; Washington scraps extra 25% tariff

India and the United States on Friday unveiled a framework for an interim trade agreement, alongside a major tariff rollback by Washington that removes the additional 25 per cent duty imposed on Indian imports last year.

The decision follows commitments by New Delhi on energy sourcing, defence cooperation and broader alignment with US national security concerns, as both sides move ahead with negotiations on a full-fledged India-US Bilateral Trade Agreement (BTA) launched in February 2025 by US President Donald J Trump and Prime Minister Narendra Modi.

Advertisement

The White House confirmed that the additional tariff, imposed in August 2025 over India’s purchase of Russian oil, will be terminated with effect from 12:01 am Eastern Standard Time on February 7, 2026.

Why the tariff rollback matters

The US administration said the decision came after a review of fresh information and recommendations from senior officials, noting that India had committed to stop directly or indirectly importing Russian Federation oil and to increase purchases of US energy products.

The White House also cited India’s agreement to expand defence cooperation with the US over the next 10 years as a key factor behind the move.

“After considering the information and recommendations these officials have provided to me, among other things, I have determined that India has taken significant steps to address the national emergency,” the executive order said. It further called the tariff modification “necessary and appropriate”.

The order states that refunds of duties already collected will be processed under US law and standard Customs and Border Protection procedures. Washington also said it would continue to monitor India’s compliance and may reconsider the tariff if Russian oil imports resume.

India-US interim trade framework: Key points

1. The US will apply a reciprocal tariff of 18 per cent on Indian-origin goods, covering sectors such as home decor, leather and footwear, apparel, plastics and rubber, artisanal products, textiles, organic chemicals, and select machinery.
2. Once the interim agreement is finalised, many Indian goods will enter the US without tariffs. This includes gems and diamonds, generic medicines, and aircraft parts.
3. The framework provides for the removal of US tariffs on certain Indian aircraft and aircraft parts imposed under national security-related proclamations on steel, aluminium, and copper.
4. India will get a special, lower-tariff quota for exporting automotive parts to the US, in line with American national security rules.
5. India will eliminate or reduce tariffs on all US industrial goods and a broad range of food and agricultural products, including soybean oil, red sorghum for animal feed, tree nuts, fresh and processed fruits, dried distillers’ grains, wine and spirits.
6. India has agreed to ease long-standing hurdles faced by US goods such as medical devices, ICT products, and food and farm items. It will also review US or international standards in these sectors within six months.
7. Both sides will put clear rules in place to ensure the trade benefits go mainly to India and the US, and not to third countries routing goods through them.
8. The two countries will work more closely on supply chains, check sensitive investments, tighten export controls, and deal with unfair trade practices by other nations.
9. India plans to buy about USD 500 billion worth of US goods over the next five years, including energy, technology products, aircraft and aircraft parts, precious metals and coking coal.
10. India and the US will also increase trade in technology products, such as equipment used in data centres, and aim to put clearer digital trade rules in place under the BTA.

Framework opens USD 30 trillion market: Goyal

Union Commerce Minister Piyush Goyal welcomed the framework, saying it would open access to a USD 30 trillion market for Indian exporters, with particular benefits for farmers, fishermen, and MSMEs.

“Under the decisive leadership of PM Narendra Modi, India has reached a framework for an Interim Agreement with the US,” Goyal said in a post on X, adding that increased exports would create “lakhs of new job opportunities for our women and youth”.

He said the framework safeguards India’s farmers and rural livelihoods by fully protecting sensitive agricultural and dairy products, including rice, wheat, maize, milk, poultry, soy, fuel ethanol, cheese, tobacco, certain vegetables and meat.

Russia oil angle and global response

Earlier, the Kremlin said India was free to source oil from any supplier.

“India has always purchased these products from other countries. Therefore, we see nothing new here,” Kremlin spokesperson Dmitry Peskov said.

Both India and the US said they would move quickly to implement the framework and work toward finalising the interim agreement, with the stated aim of concluding a comprehensive Bilateral Trade Agreement under the agreed roadmap.