New Delhi: India and the United States have taken a major step toward strengthening their economic partnership by finalizing an interim trade framework agreement. The deal, aimed at reducing tariffs, improving supply chain security, and boosting bilateral cooperation, was officially signed by US President Donald Trump.

This interim framework is being seen as a key milestone toward the proposed US–India Bilateral Trade Agreement (BTA), negotiations for which began in February 2025. Officials believe the agreement will bring balance to trade relations while ensuring safer and more reliable global supply chains.

India to Reduce Tariffs on Several US Goods

As part of the agreement, India has committed to cutting or eliminating tariffs on a wide range of American products, especially in the industrial and agricultural sectors.

Key US products that will become cheaper or easier to import into India include:

• Industrial goods (broad category of US manufactured products)
• Agricultural and food products
• DDGs (Dried Distillers Grains), used mainly as animal feed
• Red sorghum (used for livestock feed)
• Nuts and dry fruits
• Fruits
• Soybean oil
• Wine and spirits

India has also agreed to allow smoother market access for selected US goods in certain sectors, which is expected to reduce trade hurdles and improve business flow.

US to Cut Tariffs on Indian Exports

On the other side, the United States will reduce tariffs on a wide range of Indian products. According to the interim deal, the US will bring down tariffs on Indian goods from 50% to 18%, covering most export categories.

Indian sectors expected to benefit the most include:

• Textiles and garments
• Leather goods and footwear
• Plastic and rubber products
• Organic chemicals
• Home décor products
• Handicrafts
• Select machinery and industrial products

Additionally, some key Indian exports will receive significant tariff relief.

Products likely to get major benefits:

• Generic medicines
• Gems and diamonds
• Aircraft parts and components

This move is expected to increase India’s export competitiveness in the world’s largest economy.

Special Tariff Quotas and Section 232 Relief

The agreement also addresses tariffs related to US national security laws, particularly under Section 232, which covers metals such as steel, aluminium, and copper.

Major relief measures include:

• Removal of certain Section 232 tariffs on aircraft and aircraft parts imported from India
• Special quota benefits for Indian auto parts at a reduced tariff rate
• A review of pharmaceutical tariffs under ongoing US investigations

This provision could prove crucial for India’s manufacturing and engineering exports.

Non-Tariff Barriers to be Reduced

India has also agreed to remove long-standing non-tariff obstacles affecting American imports, particularly in:

• Medical devices
• ICT (Information and Communication Technology) products
• Agricultural and food imports

Over the next six months, both countries will hold talks to align standards and testing rules, including accepting international benchmarks. This is expected to simplify compliance procedures and improve trade efficiency.

Rules on Safeguards and Digital Trade

The interim deal includes strict rules to ensure that the trade benefits remain primarily for producers in India and the US. It also contains safeguard clauses allowing both sides to revise commitments if tariff conditions change.

The agreement also highlights cooperation in digital trade, where both countries will work on building formal rules under the final BTA to remove technology-related trade barriers.

India Plans to Buy $500 Billion Worth of US Goods

One of the biggest announcements linked to the deal is India’s plan to import nearly $500 billion worth of goods from the United States over the next five years.

Key categories of US imports planned by India include:

• Energy products
• Aircraft and aircraft parts
• Precious metals
• Technology products
• Coking coal

The deal also aims to boost technology trade, especially in advanced sectors such as:

• Graphics Processing Units (GPUs)
• Data center equipment

A Major Boost for Trade and Supply Chain Security

Experts believe the India–US interim trade framework will strengthen economic ties, create new opportunities for businesses, and enhance supply chain security for both nations. With reduced tariffs, easier market access, and better technology cooperation, the agreement is expected to bring long-term gains for exporters, manufacturers, and industries in both countries.

This interim framework is now being viewed as a stepping stone toward a full-fledged bilateral trade agreement, which could redefine India–US economic relations in the coming years.