India and United States agree to reduce tariffs to 18%, targeting $500 billion in bilateral trade

Under the revised framework, tariffs imposed by the US on Indian products have been reduced to 18%, paving the way for an expanded Bilateral Trade Agreement (BTA) and enhanced collaboration across strategic sectors.

The United States and India have finalized an interim trade agreement that will reduce US tariffs on Indian goods to 18 percent.

Under the deal, the US has withdrawn the additional 25 percent duty it had imposed on Indian imports.

India will reduce or eliminate tariffs on all US industrial goods and many US agricultural and food products, including dried distillers grains, sorghum for animal feed, tree nuts, fresh and processed fruits, soybean oil, wine, spirits, and more.

The US will impose an 18% tariff on Indian goods, including textiles and apparel, leather and footwear, plastics and rubber, organic chemicals, home furnishings, artisanal products, and certain machinery.

If the interim agreement is fully implemented, the US will eliminate reciprocal tariffs on several Indian products, including generic pharmaceuticals, gems and diamonds, and aircraft parts.

In addition, the US will also remove tariffs on certain aircraft and aircraft parts from India.

Both countries will address non-tariff barriers that hinder trade to facilitate smoother trade flows in both directions. India will also address long-standing barriers to US medical devices, allowing these products greater access to the Indian market.

India will eliminate restrictive import licensing requirements for US ICT (Information and Communication Technology) goods that delay market access or limit quantities.

India will also address long-standing non-tariff barriers affecting US food and agricultural products, improving access for these goods.

India plans to purchase $500 billion worth of US goods over the next five years (including energy, aircraft and parts, precious metals, technology products, and coking coal).

Both sides will also promote trade in technology products such as graphics processing units (GPUs) for data centers and enhance joint technological cooperation.

India and the US will continue negotiations on a Bilateral Trade Agreement (BTA) to further open their markets. During these BTA negotiations, the US will consider India’s request for reduced tariffs on Indian goods.