India and the United States on Saturday released a joint statement, announcing a new framework for a trade agreement between the two nations. This came after US President Donald Trump on February 2 announced a trade deal and reduced tariffs on India to 18 per cent.
Both countries said the interim deal reflects a shared commitment to fair and balanced trade, improved market access and more resilient supply chains. The agreement is being positioned as a key step towards a comprehensive trade pact between the two partners.
Agricultural and dairy products protected
Commerce Minister Piyush Goyal said the move will open a $30 trillion market for Indian exporters. He said India is committed to protect its farmers, thus sensitive agricultural and dairy products have been completely protected.
As part of the framework, India will eliminate or reduce tariffs on all US industrial goods and a broad range of food and agricultural products. These include dried distillers’ grains, red sorghum used for animal feed, tree nuts, fresh and processed fruits, soybean oil, wine, spirits and other items.
US to reduce tariffs to 18%
The United States, in turn, will reduce tariffs to 18 per cent on Indian goods under existing executive orders. These tariffs will cover sectors such as textiles and apparel, leather and footwear, plastics and rubber, organic chemicals, home decor, handicrafts and certain machinery. However, subject to the successful conclusion of the interim agreement, the US will remove reciprocal tariffs on several Indian products, including generic pharmaceuticals, gems and diamonds, and aircraft parts.
Washington has also agreed to lift certain national security-related tariffs on Indian aircraft and aircraft parts imposed under earlier proclamations on aluminium, steel and copper. India will receive a preferential tariff quota for automotive parts exported to the US, while outcomes for Indian pharmaceutical products will depend on the findings of a US investigation under Section 232.
Both nations to provide market access to each other
Both sides have committed to providing each other preferential and sustained market access in sectors of interest. They will also establish rules of origin to ensure the benefits of the agreement mainly accrue to the two countries.
The framework includes steps to address non-tariff barriers. India has agreed to ease long-standing restrictions affecting US medical devices, ICT goods and agricultural products, and to review the acceptance of US or international standards in certain sectors within six months of the agreement taking effect.
India and the US will also discuss standards and conformity assessment procedures to simplify compliance. If either side changes its tariffs in the future, the other may revise its commitments.
Beyond trade, the two countries plan closer cooperation on economic security, supply chain resilience, investment screening and export controls. India has said it intends to purchase about 500 billion dollars’ worth of US energy products, aircraft, precious metals, technology goods and coking coal over the next five years. Trade in advanced technology, including data centre equipment such as GPUs, is also expected to rise.
PM Modi thanks Trump
Hailing the trade deal between the two nations, PM Modi has thanked his US counterpart Donald Trump. He said the agreement would push the ‘Make in India’ initiative and open new avenues for several sectors.
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