In a major step toward the new trade deal, the United States and India announced a temporary agreement designed to lower taxes on imported goods, change their energy partnership, and boost economic partnership.
In a joint statement, both the countries called it a step toward a larger, more comprehensive trade agreement, and added that more talks are needed to finalise the complete deal.
Earlier this week, President Donald Trump announced that the US would reduce its tariffs on Indian products from 50 per cent down to 18 per cent. In return, India has agreed to stop buying Russian oil and lower its own barriers to trade.
Half of that original 50 per cent tariff was a penalty Trump had placed on India for buying Russian oil, which he said was helping fund Moscow's military actions in Ukraine. On Friday, Trump signed an order to remove that 25 per cent penalty after India agreed to buy its oil from the US and Venezuela instead.
The joint statement also showed that India successfully resisted pressure from the US to fully open its market to American farm products. Trade Minister Piyush Goyal confirmed this on X, saying the deal "safeguards farmers' interests and rural livelihoods by completely protecting sensitive agricultural and dairy products, including staples such as maize, wheat and rice, as well as soya, poultry, milk products, ethanol, tobacco and some vegetables and meat".
However, not everyone in India supported the deal. The Congress-led opposition claimed the agreement was "concluded largely on U.S. terms and hurt farmers and traders", describing it as a "pact that compromised national interests".
New details on the India-US trade deal
The joint statement released on Friday offered more information than what Trump initially revealed on Monday. It confirms that India has committed to buying $500 billion worth of American goods over the next five years. This includes products like: oil, gas, and coking coal, aircraft and their parts, precious metals, and technology, including graphics processing units (GPUs) for AI and data centre equipment.
The statement also said India will either get rid of or lower its tariffs on all US industrial goods. It will do the same for a variety of American food and agricultural products, such as dried distillers' grains and red sorghum (used for animal feed), tree nuts, fresh and processed fruits, soybean oil, wine, and spirits.
US to apply 18 per cent tariff on Indian goods
Under the new agreement, the US will apply an 18 per cent tariff on most goods it imports from India. This will affect products like textiles and clothing, leather and footwear, plastics and rubber, organic chemicals, home decorations, handmade artisanal goods, and some types of machinery.
also read
- Energy security for India’s 1.4 billion people comes first: MEA responds to US claims on 'Russian oil'
- The mirage of a ‘breakthrough’: Tariff cuts without transparency | Opinion
- After trade deal, Jaishankar and Rubio discuss India–US strategic partnership in Washington
- PM Modi's friendship with Trump helped India bag a better deal than competitors: Piyush Goyal
India will receive some exceptions, though. It will get the same reduced tariff rates that other US allies have on certain aircraft and aircraft parts. Additionally, India will be given a specific allowance for auto parts, allowing them to be imported at a lower tariff rate.
The statement mentioned that if the Trump administration's ongoing tariff probe into pharmaceuticals yields certain results, "India will receive negotiated outcomes with respect to generic pharmaceuticals and ingredients".
Goyal called it a gateway for Indian exporters to a market worth "$30 trillion"—the size of the US annual economy. He highlighted the benefits for "farmers, fishermen, and micro and small-to-medium enterprises".
On Thursday, he had also mentioned that the two countries plan to sign the formal, final trade agreement by March. Once signed, India's new, lower tariffs on US products will officially take effect.