India-United States Interim Trade Agreement Read The Full-Text of Joint Statement

The United States and India have agreed on a framework for an Interim Agreement on reciprocal, mutually beneficial trade. This step reinforces their ongoing negotiations toward a comprehensive U.S.-India Bilateral Trade Agreement (BTA), launched by President Donald J. Trump and Prime Minister Narendra Modi in February 2025, aimed at broader market access and more resilient supply chains.

Overview

The Interim Agreement marks a significant milestone in bilateral economic ties, setting out reciprocal tariff measures, rules of origin, non-tariff barrier reductions, and cooperation on standards, investment screening, export controls, and digital trade. It is designed to deliver concrete outcomes now while paving the way for an ambitious BTA.

Key Provisions

• Tariff cuts by India: India will eliminate or reduce tariffs on all U.S. industrial goods and a wide range of U.S. food and agricultural products, including dried distillers’ grains (DDGs), red sorghum for animal feed, tree nuts, fresh and processed fruit, soybean oil, wine and spirits, and other identified items.
• U.S. reciprocal tariff framework: The United States will apply an 18 percent reciprocal tariff under Executive Order 14257 (as amended) on originating goods of India such as textiles and apparel, leather and footwear, plastics and rubber, organic chemicals, home décor and artisanal products, and certain machinery. Subject to successful conclusion of the Interim Agreement, the United States intends to remove reciprocal tariffs on a range of goods listed in the Potential Tariff Adjustments for Aligned Partners Annex to Executive Order 14346 (as amended), including generic pharmaceuticals, gems and diamonds, and aircraft parts.
• Aircraft and industrial inputs: The United States will remove tariffs on certain aircraft and aircraft parts from India that were previously imposed under national security measures related to aluminum, steel, and copper imports.
• Automotive parts and pharmaceuticals: India will receive a preferential tariff-rate quota for automotive parts subject to U.S. national security tariffs on automobiles and parts. In addition, contingent on the outcome of the U.S. Section 232 investigation into pharmaceuticals and pharmaceutical ingredients, India will receive negotiated outcomes for generic medicines and inputs.
• Preferential market access: Both countries commit to providing each other sustained preferential market access in sectors of mutual interest.
• Rules of origin: The agreement will include rules of origin to ensure the benefits accrue predominantly to the United States and India.
• Reducing non-tariff barriers (NTBs): India will address long-standing barriers affecting U.S. medical devices; remove restrictive import licensing processes that delay market access or impose quantitative limits on U.S. ICT goods; and, within six months of the agreement’s entry into force, determine—aiming for a positive outcome—whether U.S.-developed or international standards, including testing requirements, are acceptable for U.S. exports in identified sectors. India will also work to resolve persistent NTBs impacting U.S. food and agricultural products. Both sides will discuss standards and conformity assessment procedures in mutually agreed sectors to ease compliance.
• Flexibility for tariff changes: If either country changes its agreed tariff schedules, the other may adjust its commitments accordingly.
• Path to a comprehensive BTA: The United States and India will seek to expand market access further through BTA negotiations. The United States intends to consider India’s request for additional tariff reductions on Indian goods during those talks.
• Economic security and supply chains: The countries will deepen economic security alignment to bolster supply chain resilience and innovation, including coordinated actions addressing non-market policies of third parties, and cooperation on inbound and outbound investment reviews and export controls.
• Trade and investment intentions: India plans to purchase $500 billion of U.S. energy products, aircraft and aircraft parts, precious metals, technology products, and coking coal over the next five years. Both sides will markedly expand trade in technology goods—such as GPUs and other data center equipment—and strengthen joint technology cooperation.
• Digital trade: The United States and India will address discriminatory or burdensome practices and other barriers to digital trade, setting a pathway to robust, ambitious, and mutually beneficial digital trade rules under the BTA framework.

Implementation and Next Steps

The two countries will move swiftly to operationalize this framework and finalize the Interim Agreement, with the shared goal of concluding a mutually beneficial BTA consistent with the agreed Terms of Reference and roadmap.

What This Means

• For exporters and importers: Near-term tariff relief and clearer origin rules should lower costs, broaden market access, and enhance predictability in key sectors from industrial goods to agriculture and technology.
• For supply chains: Alignment on economic security, investment screening, and export controls is expected to reduce vulnerabilities and encourage diversified, resilient sourcing.
• For standards and compliance: Progress on standards recognition and conformity assessments could streamline approvals and shorten time-to-market, particularly for ICT, medical devices, and agri-food products.
• For technology and digital trade: Expanded cooperation and steps toward modern digital trade rules may accelerate innovation, cross-border data-driven commerce, and deployment of advanced computing infrastructure.

Together, these measures are intended to deliver tangible benefits now while building momentum toward a broader, high-standard bilateral trade agreement that supports balanced, durable, and innovation-led growth in both economies.