From Slashed Tariffs To $500 Billion Purchase Plan: Top Highlights Of India-US Trade Framework

Last Updated:February 07, 2026, 07:57 IST

The move comes after Trump on Monday announced plans to lower tariffs on goods from India to 18 per cent from 25 per cent, signaling positive movement between the nations

Inching closer to a landmark trade deal, India and the United States on Saturday unveiled an interim framework with focus on lowering tariffs, deepening economic cooperation and strengthening energy ties. The agreement has been described by both US President Donald Trump and Prime Minister Narendra Modi as a major step towards a comprehensive Bilateral Trade Agreement (BTA). The move comes after Trump on Monday announced plans to lower tariffs on goods from India to 18 per cent from the earlier 25 per cent, signaling positive movement between the two nations after a prolonged period of friction.

The White House as well as India’s commerce minister Piyush Goyal outlined a 12-point framework on Saturday, categorically listing the key areas where the two countries would focus and how it would benefit both.

Here are the top highlights of the interim trade deal:

WHAT WILL INDIA DO UNDER THE AGREEMENT

• Eliminate or reduce tariffs on all US industrial goods.

• Cut duties on a wide range of US farm and food products, including dried distillers’ grains (DDGs), red sorghum for animal feed, tree nuts, fruits, soybean oil, wine, and spirits.

• Provide preferential market access in agreed sectors to facilitate smoother trade.

WHAT WILL UNITED STATES DO?

• Apply an 18 per cent reciprocal tariff on most Indian goods, including textiles, apparel, leather, footwear, plastics, rubber, organic chemicals, home décor, artisanal products, and certain machinery.

• Remove reciprocal tariffs on a wide range of Indian goods once the interim deal is successfully implemented, covering sectors such as generic pharmaceuticals, gems and diamonds, and aircraft parts.

WHAT ABOUT STEEL, ALUMINIUM AND AUTO PARTS?

• Certain Section 232 tariffs on Indian aircraft and aircraft parts related to steel, aluminium, and copper will be removed.

• India will receive a preferential tariff-rate quota for auto parts.

• Pharmaceutical tariffs will be reviewed in line with the ongoing US Section 232 investigation.

WHAT ELSE HAS INDIA AGREED TO?

Apart from the tariff barriers, India has agreed to review long-standing barriers affecting imports of:

• US medical devices

• Information and Communication Technology (ICT) goods

• Food and agricultural products

DIGITAL TRADE & RULES

The deal outlines rules of origin aimed at ensuring that trade advantages largely benefit producers in India and the United States. It allows either country to revise its commitments if there are changes to tariff levels. In addition, both sides have agreed to tackle restrictive digital trade practices and to move toward developing formal digital trade rules as part of the comprehensive BTA.

INDIA’S PURCHASE COMMITMENT

India plans to buy US goods worth $500 billion over the next five years, covering items such as energy supplies, aircraft and components, precious metals, technology products, and coking coal. The agreement also seeks to boost technology-related trade, with a focus on graphics processing units (GPUs) and equipment used in data centres.

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