What the India–US Interim Trade Agreement Means: Key Terms

Officials described the pact as a milestone intended to promote reciprocal and balanced trade while addressing long-standing tariff and regulatory barriers between the two countries.

The interim arrangement sets out tariff reductions, market-access commitments, supply-chain cooperation and large-scale purchases by India from the United States over the coming years.

Key terms of the India–US Interim Trade Agreement

• Tariff cuts by India:
  India will eliminate or reduce tariffs on all U.S. industrial goods and several agricultural products, including dried distillers’ grains (DDGs), animal-feed sorghum, tree nuts, fruits, soybean oil, wine and spirits.

• Reciprocal U.S. tariff regime:
  The United States will apply an 18% reciprocal tariff on certain Indian goods — such as textiles and apparel, leather and footwear, plastics and rubber, organic chemicals, home décor items, artisanal goods and some machinery — but plans to remove tariffs on a wide range of items once the agreement is concluded, including generic pharmaceuticals, gems and diamonds and aircraft parts.

• Removal of national-security tariffs on aviation goods:
  The U.S. will remove steel, aluminium and copper-related tariffs affecting certain Indian aircraft and aircraft parts, while India will receive a preferential tariff-rate quota for auto parts. Pharmaceutical tariff outcomes will depend on a U.S. Section 232 investigation.

• Preferential market access:
  Both countries will grant each other sustained preferential access in sectors of mutual interest.

• Rules of origin:
  New rules will ensure trade benefits primarily accrue to U.S. and Indian producers.

• Addressing non-tariff barriers:
  India will tackle barriers affecting U.S. medical devices and food products, ease import licensing restrictions on ICT goods and consider acceptance of U.S. or international standards within six months in identified sectors.

• Regulatory cooperation:
  Both sides will work on aligning standards and conformity assessment procedures to simplify compliance.

• Tariff safeguard mechanism:
  Either country may adjust commitments if the other changes agreed tariff levels.

• Path toward broader trade pact:
  The interim deal serves as a stepping stone to a full Bilateral Trade Agreement, with the U.S. considering India’s request for further tariff reductions.

• Economic security and supply chains:
  The two nations will coordinate on export controls, investment screening and measures addressing non-market practices of third countries.

• Major purchase commitments:
  India intends to buy about $500 billion worth of U.S. energy, aircraft and parts, precious metals, technology goods and coking coal over five years, alongside expanded cooperation in advanced technologies such as GPUs and data-center equipment.

• Digital trade rules:
  Both countries will work to remove discriminatory digital-trade practices and develop comprehensive digital trade provisions in the future BTA.

Officials said the framework will be implemented promptly while negotiations continue toward a comprehensive bilateral trade agreement.