US, India Announce Interim Trade Agreement Framework

United States and India Announce Interim Trade Framework

The United States and India have announced a framework for an Interim Agreement on reciprocal and mutually beneficial trade. The announcement reaffirms both countries’ commitment to the broader U.S.-India Bilateral Trade Agreement (BTA) negotiations launched by President Donald J. Trump and Prime Minister Narendra Modi on February 13, 2025. The framework aims to expand market access and strengthen supply chain resilience between the two countries.

Tariff Reductions and Market Access

Under the proposed framework, India will eliminate or reduce tariffs on U.S. industrial goods and a wide range of food and agricultural products. These include dried distillers’ grains, red sorghum for animal feed, tree nuts, fresh and processed fruit, soybean oil, wine, spirits, and other products.

The United States will apply a reciprocal tariff rate of 18 percent on originating Indian goods under Executive Order 14257 of April 2, 2025. These goods include textiles and apparel, leather and footwear, plastic and rubber, organic chemicals, home décor, artisanal products, and certain machinery. Subject to the successful conclusion of the agreement, the United States will remove tariffs on goods listed in the Potential Tariff Adjustments for Aligned Partners Annex to Executive Order 14346 of September 5, 2025, including generic pharmaceuticals, gems and diamonds, and aircraft parts.

National Security Tariffs and Sector Preferences

The United States will remove tariffs on certain Indian aircraft and aircraft parts previously imposed under Proclamations issued in March 2018 and July 2025. India will receive a preferential tariff rate quota for automotive parts under Proclamation 9888 of May 17, 2019. Negotiated outcomes regarding generic pharmaceuticals and ingredients will depend on findings from the U.S. Section 232 investigation.

Both countries agreed to provide preferential market access in sectors of mutual interest and establish rules of origin to ensure trade benefits accrue primarily to the two nations.

Addressing Non-Tariff Barriers

India agreed to address long-standing barriers affecting U.S. medical devices and remove restrictive import licensing procedures impacting U.S. Information and Communication Technology goods. Within six months of the agreement’s entry into force, India will determine whether U.S. or international standards and testing requirements will be accepted for identified sectors.

Both sides also committed to addressing non-tariff barriers affecting food and agricultural trade and to discuss standards and conformity assessment procedures to improve compliance with technical regulations.

Digital Trade, Investment, and Supply Chain Cooperation

The framework includes commitments to address discriminatory practices affecting digital trade and to develop mutually beneficial digital trade rules as part of the broader BTA. Both countries will strengthen economic security alignment, cooperate on investment reviews, export controls, and work together to enhance supply chain resilience and innovation.

India intends to purchase $500 billion worth of U.S. energy products, aircraft and parts, precious metals, technology products, and coking coal over the next five years. The two countries also plan to expand trade in technology products, including Graphics Processing Units and goods used in data centers, and increase joint technology cooperation.

Both sides will move to implement the framework promptly and continue negotiations toward concluding the Interim Agreement and a mutually beneficial Bilateral Trade Agreement.

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