US, India agree on framework for interim trade deal

Washington: The United States and India announced a framework for an Interim Agreement on reciprocal, mutually beneficial trade, a step aimed at advancing talks toward a broader bilateral trade pact, as the White House formally announced to reduce the tariff on imports of Indian products from 25 per cent to 18 per cent.

According to a joint statement, the framework reaffirms both sides’ commitment to negotiations on a US-India Bilateral Trade Agreement. Those talks were launched by President Donald J. Trump and Prime Minister Narendra Modi on February 13, 2025. The interim deal is designed to deliver early results and support more resilient supply chains, officials said.

“The Interim Agreement between the United States and India will represent a historic milestone in our countries’ partnership, demonstrating a common commitment to reciprocal and balanced trade based on mutual interests and concrete outcomes,” the announcement said.

Earlier this week, Trump spoke with Prime Minister Narendra Modi and wrote on Truth Social that the two countries have agreed on a trade deal. He pointed to reciprocity, expanded market access, and efforts to address long-standing trade imbalances as core goals, while highlighting the broader strategic importance of economic ties with New Delhi.

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

The United States will apply a reciprocal tariff rate of 18 per cent on originating goods of India under an executive order aimed at addressing large and persistent US goods trade deficits. The tariff will apply to products such as textiles and apparel, leather and footwear, plastic and rubber, organic chemicals, home décor, artisanal products, and certain machinery.

If the Interim Agreement is successfully concluded, the United States said it will remove the reciprocal tariff on a wide range of goods identified for aligned partners. These include generic pharmaceuticals, gems and diamonds, and aircraft parts.

The framework also removes US tariffs on certain aircraft and aircraft parts from India that were imposed under national security proclamations covering aluminum, steel, and copper imports. In a related move, and consistent with US national security requirements, India will receive a preferential tariff-rate quota for automotive parts subject to tariffs on automobile and auto parts imports.

India will also receive negotiated outcomes on generic pharmaceuticals and pharmaceutical ingredients. That provision is contingent on the findings of a US Section 232 investigation.

Both countries agreed to provide each other with preferential market access in sectors of interest and to establish rules of origin. These rules are intended to ensure that the benefits of the agreement accrue mainly to the United States and India.

As per the joint statement, the framework also addresses non-tariff barriers. India has agreed to address long-standing barriers affecting US medical devices. It will eliminate restrictive import licensing procedures that delay or limit access for US information and communication technology goods. India also agreed to determine within six months whether US-developed or international standards are acceptable for exports in identified sectors, and to address barriers affecting US food and agricultural products.

The two sides also outlined cooperation on standards, conformity assessment procedures, digital trade, and economic security. This includes work on supply chain resilience, investment reviews, and export controls. India said it intends to purchase $500 billion of US energy products, aircraft and aircraft parts, precious metals, technology products, and coking coal over the next five years. Both sides also plan to expand trade and cooperation in technology products used in data centers.

The United States and India said they will promptly implement the framework and work toward finalizing the Interim Agreement, to conclude a mutually beneficial Bilateral Trade Agreement consistent with the agreed roadmap.

IANS