India-US Trade Deal: India and the United States on Saturday, Feb. 7, announced that they have reached a framework for an interim trade agreement under which both sides will reduce import duties on a number of goods to boost two-way trade. According to a joint statement issued by both sides, India has expressed its intention to purchase $500 billion of US energy products, aircraft and aircraft parts, precious metals, technology products and coking coal over the next five years.
Further, through an executive order, US President Donald Trump has removed the 25% tariffs, or additional import duty, that it imposed on India in August last year for purchasing Russian oil, citing that the country has undertaken "significant steps". Here are the top 10 key highlights of the interim trade deal agreement signed between the two nations:
India-US Interim Trade Deal: Top 10 Highlights
1. Major Tariff Reductions, Market Access
India's Concessions: India commits to eliminate or reduce tariffs on all US industrial goods: A wide range of US food and agricultural products (specifically Dried Distillers Grains, red sorghum, tree nuts, fruits, soybean oil, wine, and spirits).
US Concessions: US generally applies a reciprocal tariff rate of 18% on Indian goods. However, under this agreement, the US agrees to remove this reciprocal tariff on specific Indian exports, including: Generic pharmaceuticals, gems, diamonds and aircraft parts.
Metals and Aviation: US will also remove tariffs on Indian aircraft and parts previously imposed under national security proclamations (Aluminum, Steel, and Copper).
2. Massive Financial Commitment
The $500 Billion Pledge: A standout figure in the document is India's intention to purchase $500 billion worth of U.S. goods over the next five years.
Target Sectors: This purchasing commitment focuses on energy products, aircraft, precious metals, technology products, and coking coal.
3. Technology and Supply Chain Security
High-Tech Trade: Both nations agree to significantly increase trade in technology products, specifically mentioning Graphics Processing Units (GPUs) and data center goods.
Supply Chain Resilience: The agreement emphasizes strengthening economic security and addressing "non-market policies of third parties" (often a diplomatic reference to countering influence from competitors like China).
Export Controls: Cooperation on inbound and outbound investment reviews and export controls.
4. Eliminating Non-Tariff Barriers (NTBs)
Medical & ICT Goods: India agrees to address long-standing barriers in the US medical device trade and eliminate restrictive import licensing on U.S. Information and Communication Technology (ICT) goods.
Standards Alignment: India will determine within six months if US/international standards are acceptable for US exports entering India, aiming to simplify testing requirements.
5. Date of effective taruiff rate: The White House announced in a statement that the new tariff rate of 18% for India as agreed in the interim trade deal pact will be effectivbe immediately from Saturday, Feb. 7, 2026.
6. Future Roadmap for BTA
Digital Trade: Both sides commit to setting a pathway for robust digital trade rules within the broader BTA.
Flexibility: The agreement includes a clause allowing one country to modify commitments if the other changes its agreed-upon tariffs.
Goal: The ultimate objective is to conclude a comprehensive, mutually beneficial Bilateral Trade Agreement (BTA).
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