India and the United States have agreed on the framework for an Interim Agreement on reciprocal and mutually beneficial trade, marking a significant step towards a full-fledged US–India Bilateral Trade Agreement (BTA). The framework, announced jointly, builds on trade negotiations launched by Prime Minister Narendra Modi and US President Donald Trump in February 2025.
The interim pact is intended as a bridge agreement, unlocking early market access gains while negotiations continue on a broader, legally binding BTA covering goods, services, supply chains and digital trade.
Under the interim framework, Indian exports will, for now, continue to attract a reciprocal tariff of 18 per cent. However, the United States has agreed to scrap these duties across a broad range of products once the agreement is fully concluded. In a separate move, Washington has already
rolled back the additional 25 per cent tariffs earlier imposed on Indian goods over concerns related to India’s purchases of Russian oil, providing relief to exporters.
What the interim trade framework does
The framework outlines tariff cuts, easier market access and closer regulatory cooperation. It also includes safeguards to protect domestic industries and national security interests in both countries.
For India, the deal aims to improve access to the US market for key export sectors. It also seeks to resolve long-standing trade issues and provide greater clarity ahead of broader BTA negotiations.
Tariff commitments: What India is offering
Under the deal’s framework, India will either scrap or cut tariffs on all US industrial goods and a wide range of agricultural and food items, including:
- Animal feed such as dried distillers’ grains and red sorghum
- Tree nuts, fresh and processed fruits
- Soybean oil
- Wine and spirits
The move reflects India’s willingness to open up selected parts of its agriculture and processed food markets, even as politically sensitive staple items remain outside the scope of the interim agreement.
What India gets in return
The United States has agreed to lift reciprocal tariffs on a broad set of Indian exports once the interim agreement is concluded, including:
- Generic pharmaceuticals
- Gems and diamonds
- Aircraft and aircraft parts
Until then, Indian goods will continue to attract a reciprocal tariff of 18 per cent, with these duties set to be withdrawn for specified products once the agreed implementation conditions are fulfilled.
Separately, Washington will also roll back national security-related tariffs on Indian aircraft and aircraft parts that were imposed under earlier steel, aluminium and copper trade measures.
Protection for Indian industry: What is excluded or safeguarded
Even as it expands market access, the framework builds in clear safeguards to protect Indian interests:
- No blanket opening of sensitive agricultural commodities
- Tariff relief for Indian pharmaceuticals remains contingent on US national security reviews, preventing automatic exposure
- Automotive exports are protected through a preferential tariff-rate quota, rather than full tariff elimination
- India retains the right to adjust its commitments if US tariffs change, preserving negotiating leverage
The agreement also provides that rules of origin will largely confine benefits to Indian and US producers, reducing the scope for third-country routing.
Non-tariff barriers: India commits to phased reforms
India has also agreed to address several long-standing concerns raised by the United States, including:
- Pricing and regulatory barriers in medical devices
- Import licensing procedures for ICT products
- Standards and conformity assessments in identified sectors
These commitments, however, are time-bound and consultative in nature. India has set aside a six-month window after the agreement comes into force to review and assess the acceptance of US or international standards.
Strategic and digital trade alignment
Beyond tariffs, the framework focuses on economic security and supply chain resilience, including cooperation on:
- Investment screening
- Export controls
- Addressing non-market practices of third countries
India and the US have also agreed to work towards ambitious digital trade rules under the BTA. These efforts will address discriminatory or burdensome digital trade practices.
Big-ticket purchases and technology cooperation
India has indicated its intent to purchase $500 billion worth of US goods over five years, including:
- Energy products
- Aircraft and aircraft parts
- Technology products
- Coking coal and precious metals
The two sides also plan to expand trade in advanced technology products, including GPUs used in data centres. This will be accompanied by deeper technology cooperation.
What happens next
Both countries will move quickly to implement the framework and work towards finalising the Interim Agreement. Parallel talks will continue on the broader Bilateral Trade Agreement, with India formally seeking deeper cuts in US tariffs on its exports.
The interim pact is expected to deliver early gains, reduce trade uncertainty, and lay the political and economic foundation for a more comprehensive US–India trade deal.
 "India, US agree on interim trade deal framework ahead of full deal talks")
