India and the US unveiled a framework for an interim trade agreement on February 7, 2026, under which the US will reduce tariffs on Indian goods to 18% and India will lower duties on US industrial and agricultural products. The deal safeguards sensitive agricultural and dairy sectors while advancing bilateral trade ties. Commerce Minister Piyush Goyal described it as opening a $30 trillion market for Indian exporters.
The United States and India released a framework for an interim trade agreement on Friday, marking a key step toward a broader bilateral trade agreement (BTA). This announcement follows nearly a year of negotiations initiated by President Donald Trump and Prime Minister Narendra Modi in February 2025.
According to the joint statement, the US will apply an 18% reciprocal tariff rate on Indian-origin goods, down from 25%, covering textiles and apparel, leather and footwear, plastic and rubber products, organic chemicals, home decor, artisanal goods, and certain machinery. Upon successful conclusion, tariffs will be removed on generic pharmaceuticals, gems and diamonds, and aircraft parts. The US also lifted national security tariffs on Indian aircraft and parts related to steel, aluminum, and copper imports.
India will eliminate or reduce tariffs on all US industrial goods and a wide range of food and agricultural products, including dried distillers’ grains, red sorghum for animal feed, tree nuts, fresh and processed fruits, soybean oil, wine, and spirits. Sensitive items like maize, wheat, rice, soya, poultry, milk, cheese, ethanol, tobacco, certain vegetables, and meat remain fully protected. Commerce Minister Piyush Goyal stated, 'Under the decisive leadership of PM Narendra Modi, India has reached a framework for an Interim Agreement with the US. This will open a $30 trillion market for Indian exporters, especially MSMEs, farmers, and fishermen, creating lakhs of new job opportunities.'
Trump signed an executive order removing the 25% penalty tariff imposed on India for purchasing Russian oil, claiming India has committed to halting such imports and buying US energy products instead. India intends to purchase $500 billion worth of US energy products, aircraft and parts, precious metals, technology goods, and coking coal over the next five years. Both nations agreed to address non-tariff barriers, align standards, and enhance supply chain resilience. The framework paves the way for a full agreement by March, strengthening economic ties amid global trade tensions.
