New Delhi/Washington: India and the United States have reached a framework for an Interim Agreement on reciprocal and mutually beneficial trade, marking a significant step forward in their ongoing Bilateral Trade Agreement (BTA) negotiations launched in February 2025.
The two sides described the move as a milestone that reinforces their commitment to balanced trade, deeper market access and more resilient supply chains.
Under the proposed deal, India will eliminate or reduce tariffs on all US industrial goods and a wide range of American food and agricultural products, including animal feed inputs, tree nuts, fruits, soybean oil, wine and spirits. In return, the US will apply a reciprocal tariff rate of 18% on originating Indian goods—covering sectors such as textiles and apparel, leather and footwear, plastics and rubber, organic chemicals, home décor and certain machinery—while committing to remove these reciprocal tariffs on a wide range of products once the Interim Agreement is successfully concluded. The list includes generic pharmaceuticals, gems and diamonds, and aircraft parts.
The US will also roll back tariffs on certain Indian aircraft and aircraft parts imposed earlier on national security grounds. India, for its part, will receive preferential tariff rate quotas for automotive parts, and subject to the outcome of a US investigation, negotiated outcomes for generic pharmaceuticals and ingredients. Both countries have agreed to extend preferential market access in sectors of mutual interest on a sustained basis.
Beyond tariffs, the framework addresses non-tariff barriers. India has agreed to tackle long-standing issues affecting US medical devices, simplify restrictive import licensing for ICT goods, and review acceptance of US or international standards in identified sectors within six months of the agreement’s entry into force. The two sides will also work on standards and conformity assessment procedures to ease compliance and facilitate trade.
A key strategic plank is economic security and supply-chain resilience. The agreement outlines cooperation on investment reviews, export controls and joint efforts to counter non-market policies of third countries, alongside a push to expand technology trade—especially in products such as GPUs and data-centre equipment—and deepen joint technology collaboration.
In a major commercial commitment, India intends to purchase $500 billion worth of US energy products, aircraft and parts, precious metals, technology products and coking coal over the next five years, signalling a sharp ramp-up in bilateral trade flows. The two sides have also committed to address barriers to digital trade and work towards ambitious, mutually beneficial digital trade rules under the BTA framework.
The Interim Agreement will be implemented swiftly, with both countries aiming to finalise it as a stepping stone to a comprehensive BTA, keeping the door open for further tariff reductions and wider market access as negotiations progress.