- The United States and India unveil an interim trade framework and a deal is likely next month.
- American tariffs are reduced to 18%, India abandons Russian oil and turns to American energy.
- India will reduce customs duties on American industrial and agricultural products.
The United States and India moved closer to a trade deal on Friday, releasing an interim framework that would cut tariffs, reshape energy ties and deepen economic cooperation as the two countries seek to realign global supply chains.
The framework reaffirms their commitment to negotiations for a broader bilateral trade deal, the two governments said in a joint statement, while noting that further negotiations were needed to finalize the deal.
US President Donald Trump on Monday announced a deal with India to reduce US tariffs on Indian goods from 50% to 18%, in exchange for India stopping its purchases of Russian oil and lowering trade barriers.
Half of the 50% rate had been separately imposed by Trump as punishment for India’s purchases of Russian oil, which he said fueled Moscow’s war effort in Ukraine. Trump signed an executive order Friday canceling that 25% share after India agreed this week to shift its oil purchases to the United States and Venezuela.
New details on fare reductions
Friday’s joint statement provides additional details compared to the initial outline of the trade deal revealed by Trump on Monday.
It confirms that India will purchase $500 billion worth of US goods over five years, including oil, gas, coking coal, aircraft and aircraft parts, precious metals and technology products. The final category includes graphics processing units, typically used for AI applications, and other assets used in data centers.
He said India would eliminate or reduce tariffs on all U.S. industrial products and a wide range of U.S. food and agricultural products, including dried distillers grains and red sorghum for animal feed, tree nuts, fresh and processed fruits, soybean oil, wine and spirits.
The United States maintains tariffs of 18%
But the deal will apply an 18% tariff rate on most U.S. imports from India, including textiles and clothing, leather and footwear, plastics and rubber, organic chemicals, home decor, handicrafts and some machinery.
India will benefit from the same tariff relief given to other allied countries that have signed trade agreements with the United States on certain aircraft and aircraft parts, and will receive a quota for imports of auto parts which will be subject to a lower duty rate, the statement said.
Depending on the results of the Trump administration’s tariff investigation on pharmaceutical products and their ingredients, “India will obtain negotiated results regarding generic pharmaceutical products and their ingredients,” the statement said.
Indian Commerce Minister Piyush Goyal welcomed the framework agreement in a social media post on
Goyal had said on Thursday that Washington and New Delhi intended to sign a formal trade deal in March, after which Indian tariff cuts on US exports would take effect.
Accept American standards
India also agreed to tackle long-standing non-tariff barriers on imports of agricultural products, medical devices and communications equipment, with negotiations to be completed within six months on a deal to accept U.S. or international safety and licensing standards for product imports.
The United States has said it intends to consider India’s requests to reduce tariffs on Indian products in subsequent negotiations on the bilateral trade deal. The two sides also agreed to cooperate on enforcing export controls on sensitive technologies and to take steps to combat “third-party non-market policies,” a reference to China.
The United States and India have been struggling for years to reach a comprehensive trade deal, with disputes spanning agriculture, digital trade, medical devices and market access. But strategic concerns — including competition with China, supply chain diversification and energy security — have injected new urgency into the negotiations, officials from both countries say.
