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US, India unveil framework for interim trade agreement; What's in the deal
US, India unveil framework for interim trade agreement; What's in the deal
The two countries have also agreed to strengthen cooperation on standards and conformity assessment procedures to simplify compliance and allow adjustments to commitments if either side changes agreed tariffs.
The United States and India have unveiled a framework for an Interim Agreement focused on reciprocal and mutually advantageous trade, marking a major step towards progressing the wider US-India Bilateral Trade Agreement (BTA) negotiations, which were initiated by President Donald Trump and Prime Minister Narendra Modi in February 2025, according to a joint statement from the White House and India's Commerce Ministry.
Under the framework, India will eliminate or reduce tariffs on all US industrial goods and a wide range of US food and agricultural products, including dried distillers' grains, red sorghum for animal feed, tree nuts, fresh and processed fruits, soybean oil, wine and spirits, among others.
The statement highlighted that the Interim Agreement between the United States and India marks a historic milestone in the bilateral partnership, reflecting a shared commitment to balanced, reciprocal trade grounded in mutual interests and tangible results.
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Removal and reduction of tariffs
As per the joint statement, US will, in turn, US will apply 18% reciprocal tariff on India-origin goods under the applicable executive order, covering sector such as textiles and apparel, leather and footwear, plastics and rubber, organic chemicals, home decor, artisanal products, and certain machinery.
"Subject to the successful conclusion of the Interim Agreement, the US will remove reciprocal tariffs on a wide range of goods, including generic pharmaceuticals, gems and diamonds, and aircraft parts."
The framework also allows for the elimination of US tariffs on certain Indian aircraft and aircraft components that were imposed under national security-related proclamations on aluminum, steel, and copper. India will benefit from a preferential tariff rate quota for automotive parts, in line with US national security requirements.
Additionally, depending on the results of a US Section 232 investigation, India is expected to secure negotiated terms for generic pharmaceuticals and pharmaceutical ingredients, the statement noted.
Provide each other a preferential market access
The statement added that both countries have pledged to provide each other with preferential market access in mutually important sectors on a sustained basis and to establish rules of origin to ensure that the agreement's benefits primarily favor the United States and India. The statement also noted that the two sides will also address non-tariff barriers affecting bilateral trade.
India has agreed to take measures to resolve longstanding obstacles in areas such as US medical devices, information and communication technology products, and food and agricultural goods, and to review the acceptance of US-developed or international standards in specified sectors within six months of the agreement's implementation.
India plans to purchase $500 billion worth of US products
The two countries have also agreed to strengthen cooperation on standards and conformity assessment procedures to simplify compliance and allow adjustments to commitments if either side changes agreed tariffs. Beyond the Interim Agreement, both countries indicated they will pursue further market access expansion through the BTA negotiations, with the US stating it will consider India's request to continue efforts to reduce tariffs on Indian goods during the discussions.
India signaled its plan to procure $500 billion worth of US energy products, aircraft and aircraft components, precious metals, technology products, and coking coal over the next five years. The two countries also agreed to substantially boost trade in technology products, including graphics processing units for data centers, and to deepen joint technology collaboration.
The framework emphasises enhanced economic security alignment, covering collaboration on supply chain resilience, investment reviews, export controls, and responses to non-market practices by third parties.
The Washington and New Delhi further pledged to address barriers to digital trade and to establish a roadmap for robust, mutually beneficial digital trade rules under the BTA. The two sides will soon implement the framework and work toward finalising the Interim Agreement, aiming conclusion of comprehensive and mutually beneficial Bilateral Trade Agreement
Source: ZeeNews
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