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Washington DC: The United States of America and India on Thursday announced a framework for an Interim Agreement on reciprocal and mutually beneficial trade, marking a significant step toward a full-fledged bilateral trade agreement between the two strategic partners.
The announcement follows a joint statement issued after the US President Donald J. Trump unveiled what his administration described as a trade deal aimed at removing tariff and non-tariff barriers and opening India’s market of more than 1.4 billion people to American products.
Ambassador Greer, reacting to the development, said the agreement would lower tariffs for U.S. industrial goods and a wide range of agricultural products, calling it a major opportunity for American workers, farmers and producers. He also thanked India’s Minister of Commerce and Industry Piyush Goyal for his leadership in advancing what he described as a “fair and balanced” trade relationship.
The two sides said the framework reaffirms their commitment to the broader U.S.–India Bilateral Trade Agreement (BTA) negotiations launched by President Trump and Indian Prime Minister Narendra Modi on February 13, 2025. The final BTA is expected to deepen market access and strengthen supply-chain resilience across sectors.
Check map below, the US Trade Representative has recognised Pak Occupied Kashmir, including Aksai Chin, as integral part of India.
Key features of the Interim Agreement framework
India will eliminate or reduce tariffs on all U.S. industrial goods and a wide range of U.S. food and agricultural products. These include dried distillers’ grains, red sorghum for animal feed, tree nuts, fresh and processed fruits, soybean oil, wine and spirits, and several additional products.
The United States will apply a reciprocal tariff rate of 18 per cent on originating Indian goods under its existing executive order framework. Covered product groups include textiles and apparel, leather and footwear, plastics and rubber, organic chemicals, home décor and artisanal products, and certain categories of machinery.
Subject to the successful conclusion of the Interim Agreement, the U.S. will remove reciprocal tariffs on a broad set of Indian exports, including generic pharmaceuticals, gems and diamonds, and aircraft parts identified in the aligned partners annex of a later executive order.
Washington will also remove certain tariffs on aircraft and aircraft parts from India that were earlier imposed under national security-related proclamations covering aluminium, steel and copper imports.
At the same time, India will receive a preferential tariff-rate quota for automotive parts that are otherwise subject to U.S. national security tariffs.
Pharmaceuticals, rules of origin and market access
Outcomes related to generic pharmaceuticals and pharmaceutical ingredients will depend on the findings of the ongoing U.S. Section 232 investigation. Both sides have committed to negotiated results in this sector.
The two governments will establish rules of origin to ensure that the benefits of the agreement accrue primarily to producers in the United States and India. They also agreed to provide each other preferential market access in sectors of mutual interest on a sustained basis.
Tackling non-tariff barriers
A major focus of the interim framework is the removal of long-standing non-tariff barriers.
India has agreed to:
- address barriers affecting U.S. medical devices;
- eliminate restrictive and time-consuming import licensing procedures for U.S. information and communication technology (ICT) goods; and
- determine, within six months of the agreement entering into force, whether U.S.-developed or international standards and testing requirements can be accepted for specific sectors.
India will also work to resolve long-standing non-tariff barriers affecting U.S. food and agricultural exports. Both countries plan discussions on standards and conformity assessment procedures to improve regulatory compliance and predictability.
Safeguards and future tariff adjustments
The framework provides that if either side changes its agreed tariff commitments, the other country may modify its own commitments. Both governments will use the interim pact as a platform to expand market access further during the BTA negotiations.
The United States has also indicated that it will take into account India’s request to continue lowering tariffs on Indian goods during the broader BTA talks.
Economic security and supply chains
The two countries agreed to strengthen economic security coordination to enhance supply-chain resilience and innovation. This will include cooperation to address non-market policies of third countries, as well as closer coordination on inbound and outbound investment reviews and export controls.
Major purchasing and technology cooperation
A major commercial commitment outlined in the framework is India’s stated intention to purchase about USD 500 billion worth of U.S. energy products, aircraft and aircraft parts, precious metals, technology products and coking coal over the next five years.
The two sides also agreed to significantly expand trade in technology products, including graphics processing units (GPUs) and other goods used in data centres, and to deepen joint technology cooperation.
Digital trade and innovation
Both governments committed to address discriminatory or burdensome practices affecting digital trade and to establish a clear pathway for ambitious and mutually beneficial digital trade rules as part of the final Bilateral Trade Agreement.
Roadmap to a full BTA
Officials said the interim framework will be implemented promptly, with the objective of finalising the Interim Agreement and moving toward a comprehensive U.S.–India Bilateral Trade Agreement in line with the roadmap set out in the agreed Terms of Reference.
Describing the agreement as a historic milestone, the joint statement said the interim pact reflects a shared commitment by Washington and New Delhi to reciprocal and balanced trade, concrete outcomes and deeper economic partnership between the two democracies.
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