India and the United States on Saturday announced that they have reached a framework for an Interim Trade Agreement, marking a major step forward in bilateral economic engagement and reaffirming their commitment to concluding a comprehensive Bilateral Trade Agreement (BTA).
According to a joint statement issued by the two countries, the framework reflects a shared commitment to reciprocal and balanced trade based on mutual interests and concrete outcomes. The Interim Agreement builds on the BTA negotiations launched by US President Donald J. Trump and Prime Minister Narendra Modi on February 13, 2025, and is expected to support expanded market access and more resilient supply chains.
Under the framework, India will eliminate or reduce tariffs on all US industrial goods and a broad range of US food and agricultural products, including animal feed, fruits, nuts, soybean oil, wine, spirits and other items. In return, the United States will apply a reciprocal tariff rate of 18 per cent on Indian-origin goods, with provisions to remove these tariffs on a wide range of products once the Interim Agreement is successfully concluded.
The United States has also agreed to remove tariffs on certain Indian aircraft and aircraft parts that were earlier imposed on national security grounds. India, in turn, will receive preferential tariff treatment for automotive parts, subject to US national security requirements. Negotiated outcomes have also been envisaged for Indian generic pharmaceuticals and pharmaceutical ingredients, contingent on the findings of a US investigation.
Both sides have committed to providing each other sustained preferential market access in sectors of mutual interest and to establishing rules of origin to ensure that the benefits of the agreement accrue primarily to India and the United States.
The framework also addresses non-tariff barriers affecting bilateral trade. India has agreed to take steps to resolve long-standing issues related to US medical devices, streamline import licensing procedures for US information and communication technology products, and review standards and testing requirements to facilitate market access. The two countries will also work together to address non-tariff barriers in food and agricultural trade and enhance cooperation on standards and conformity assessment procedures.
In addition, India and the United States have agreed to strengthen economic security alignment to improve supply chain resilience and innovation, including cooperation on investment reviews, export controls and responses to non-market policies of third countries.
As part of broader economic engagement, India has expressed its intention to purchase USD 500 billion worth of US energy products, aircraft and aircraft parts, precious metals, technology products and coking coal over the next five years. The two sides also plan to significantly expand trade in technology products, including components used in data centres, and deepen joint technology cooperation.
The framework further commits both countries to addressing barriers to digital trade and to working towards robust, ambitious and mutually beneficial digital trade rules as part of the Bilateral Trade Agreement.
India and the United States said they will move swiftly to implement the framework and work towards finalising the Interim Agreement, with the aim of concluding a comprehensive and mutually beneficial Bilateral Trade Agreement in line with the agreed roadmap.
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