India and the United States have reached a framework for an Interim Trade Agreement, marking a new phase in bilateral economic engagement. The announcement was made following discussions between Prime Minister Narendra Modi and US President Donald J. Trump, reaffirming both countries’ commitment to expanding trade, investment, and technology cooperation.
The framework is positioned as a step toward deeper economic partnership and reflects ongoing efforts to strengthen supply chains and market access between the two economies.
Tariff Reductions and Export Opportunities
Under the framework, the United States will reduce reciprocal tariffs on Indian goods to 18 percent. The revised tariff structure is expected to expand opportunities for Indian exporters across sectors, including textiles and apparel, leather and footwear, plastic and rubber products, organic chemicals, home décor, artisanal products, and select machinery.
In addition, tariffs will be reduced to zero on several product categories such as generic pharmaceuticals, gems and diamonds, and aircraft parts. These changes are expected to improve export competitiveness and support domestic manufacturing initiatives.
Further, India will receive exemptions under Section 232 on aircraft parts, a tariff rate quota on auto parts, and negotiated outcomes on generic pharmaceuticals, which may strengthen export performance in these sectors.
Protection of Sensitive Agricultural Sectors
The framework also includes provisions aimed at protecting sensitive agricultural and dairy sectors in India. Products such as maize, wheat, rice, soya, poultry, milk, cheese, ethanol used as fuel, tobacco, certain vegetables, and meat remain fully protected.
The approach is intended to safeguard farmers’ interests and maintain stability in rural livelihoods while allowing broader trade engagement in other sectors.
Economic Cooperation and Employment Outlook
Both countries emphasised that the framework will support deeper economic cooperation and promote innovation and investment partnerships. The agreement is expected to strengthen supply chain resilience and expand technology collaboration.
The development comes as part of ongoing bilateral trade engagement, with both nations aiming to enhance growth and create employment opportunities, particularly for women and youth. More details on the earlier stage of the agreement can be found in the report on the US-India interim trade agreement framework.
The Interim Agreement framework is expected to guide future negotiations and reinforce long-term economic cooperation between India and the United States.
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