Washington, Feb 07: The United States and India on Saturday announced that they have reached a framework for an Interim Trade Agreement, according to a joint statement issued by the White House.
“The United States of America and India are pleased to announce that they have reached a framework for an Interim Agreement on reciprocal and mutually beneficial trade,” the statement said, adding that the US will apply a reciprocal tariff rate of 18 percent on Indian goods.
The statement described the Interim Agreement as a historic milestone in bilateral relations, reflecting a shared commitment to balanced and reciprocal trade based on mutual interests and concrete outcomes.
As part of the framework, India will eliminate or reduce tariffs on all US industrial goods and a wide range of US food and agricultural products. These include dried distillers’ grains (DDGs), red sorghum for animal feed, tree nuts, fresh and processed fruits, soybean oil, wine, spirits and other items.
The United States will apply a reciprocal tariff rate of 18 percent under relevant executive orders on Indian-origin goods such as textiles and apparel, leather and footwear, plastics and rubber, organic chemicals, home décor, artisanal products and certain machinery. Subject to the successful conclusion of the Interim Agreement, the US will also remove reciprocal tariffs on a broad range of Indian products, including generic pharmaceuticals, gems and diamonds, and aircraft parts.
The US will further lift tariffs on certain Indian aircraft and aircraft parts imposed under earlier national security proclamations related to aluminum, steel and copper imports. In line with US national security requirements, India will receive a preferential tariff-rate quota for automotive parts. Depending on the outcome of the US Section 232 investigation, India will also receive negotiated outcomes for generic pharmaceuticals and pharmaceutical ingredients.
Both countries agreed to provide each other preferential market access in sectors of mutual interest on a sustained basis and to establish rules of origin to ensure that the benefits of the agreement accrue primarily to the two nations.
The framework also addresses non-tariff barriers affecting bilateral trade. India agreed to resolve long-standing issues related to US medical devices, remove restrictive import licensing procedures for US ICT goods, and work towards accepting US-developed or international standards in identified sectors within six months of the agreement’s entry into force. India also committed to addressing non-tariff barriers affecting US food and agricultural exports.
To enhance regulatory cooperation, the two sides will discuss standards and conformity assessment procedures in mutually agreed sectors. They also agreed that any future changes to tariffs by either country would allow the other to modify its commitments accordingly.
The US and India will work towards expanding market access through negotiations for a broader Bilateral Trade Agreement (BTA). The US said it would consider India’s request for further tariff reductions on Indian goods during these negotiations.
Both sides also agreed to strengthen economic security cooperation to improve supply chain resilience and innovation, including coordination on investment reviews, export controls and addressing non-market policies of third parties.
India said it intends to purchase $500 billion worth of US energy products, aircraft and aircraft parts, precious metals, technology products and coking coal over the next five years. The two countries will also significantly expand trade and cooperation in technology products, including GPUs and data centre-related goods.
In addition, the US and India committed to addressing barriers to digital trade and establishing a clear pathway towards robust, ambitious and mutually beneficial digital trade rules under the proposed BTA.
The statement said both countries will promptly implement the agreed framework and work towards finalising the Interim Agreement, with the aim of concluding a comprehensive Bilateral Trade Agreement in line with the agreed roadmap. (Agencies)
