Modi says India, US trade deal boosts Make in India, thanks Trump for robust ties between 2 nations
New Delhi: India and the United States of America formally announced the interim trade agreement under which tariffs on New Delhi will be reduced to 18 per cent by the US. Terming the deal as a "historic milestone" in their partnership, the two countries said it demonstrates a common commitment to reciprocal and balanced trade based on mutual interests and concrete outcomes. Lauding the trade pact, Prime Minister Narendra Modi said it will strengthen 'Make in India' by opening up new opportunities in various sectors and will help create jobs. The PM thanked US President Donald Trump for his personal commitment to robust ties between India and the US.
The deal supports India’s national security interests as the US will remove tariffs on certain aircraft, aircraft parts and receive a preferential tariff rate quota for automotive parts to eliminate threats to national security. India has also agreed to address long-standing non-tariff barriers to the trade in US food and agricultural products. The joint statement said India intends to purchase $500 billion of US energy products, aircraft and aircraft parts, precious metals, technology products, and coking coal over the next five years. The deal has no mention of purchase of Russian oil and the Indian government has made it clear in the past that all its actions will be taken keeping in mind the need of its people, and energy sourcing will be diversified in keeping with objective market conditions and evolving international dynamics.
“The US and India are pleased to announce that they have reached a framework for an Interim Agreement regarding reciprocal and mutually beneficial trade (Interim Agreement). Today’s framework reaffirms the countries’ commitment to the broader U.S.-India Bilateral Trade Agreement (BTA) negotiations, launched by President Donald J. Trump and Prime Minister Narendra Modi on February 13, 2025, which will include additional market access commitments and support more resilient supply chains. The Interim Agreement between the United States and India will represent a historic milestone in our countries’ partnership, demonstrating a common commitment to reciprocal and balanced trade based on mutual interests and concrete outcomes,” read the joint statement on the pact.
PM Modi said India and the US share a commitment to promoting innovation and this framework will further deepen investment and technology partnerships between the two nations. “Great news for India and USA! We have agreed on a framework for an Interim Trade Agreement between our two great nations. I thank President Trump for his personal commitment to robust ties between our countries. This framework reflects the growing depth, trust and dynamism of our partnership. It strengthens ‘Make in India’ by opening new opportunities for India’s hardworking farmers, entrepreneurs, MSMEs, StartUp innovators, fishermen and more. It will generate large-scale employment for women and youngsters,” PM Modi said in a post on X tagging Mr Trump.
“This framework will also strengthen resilient and trusted supply chains and contribute to global growth. As India moves forward towards building a Viksit Bharat, we remain committed to building global partnerships that are future-oriented, empower our people and contribute to shared prosperity,” added PM.
Union Commerce Minister Piyush Goyal said, "Today is a crucial day in India's journey towards becoming a developed nation…Today will be etched in golden letters." While addressing a press conference on Saturday he clarified the pact will not hurt the interests of Indian farmers, MSMEs, textile sector in any way and added several Indian goods, including agriculture, will attract zero reciprocal tariff in the US. India, however, remained tight-lipped on the purchase of Russian oil despite the US President saying India will not buy oil from Moscow.
“A new day! All credit to President Trump and Prime Minister Modi for their leadership and vision in achieving this,” wrote the new US ambassador to India Sergio Gor.
As per the agreement, India will eliminate or reduce tariffs on all US industrial goods and a wide range of American food and agricultural products, including dried distillers' grains, red sorghum for animal feed, tree nuts, fresh and processed fruit, soybean oil, wine and spirits, and additional products. The US will reduce the import duty to 18 per cent on goods originating from India, including textile and apparel, leather and footwear, plastic and rubber, organic chemicals, home décor, artisanal products, and certain machinery.
Later, subject to the successful conclusion of the Interim Agreement, the US will remove the reciprocal tariff on a wide range of goods identified in the Potential Tariff Adjustments for Aligned Partners including generic pharmaceuticals, gems and diamonds, and aircraft parts. India will also gain on generic pharmaceuticals and ingredients.
As per deal, the two countries will address non-tariff barriers that affect bilateral trade. India has agreed to address long-standing barriers to the trade in US medical devices; eliminate restrictive import licensing procedures that delay market access for, or impose quantitative restrictions on, US ICT goods; and determine, with a view towards a positive outcome, within six months of entry into force of the Agreement whether US-developed or international standards, including testing requirements, are acceptable for the purposes of US exports entering the Indian market in identified sectors. The two sides will significantly increase trade in technology products, including Graphics Processing Units (GPUs) and other goods used in data centers, and expand joint technology cooperation.
“The US and India commit to address discriminatory or burdensome practices and other barriers to digital trade and to set a clear pathway to achieve robust, ambitious, and mutually beneficial digital trade rules as part of the BTA. The US and India will promptly implement this framework and work towards finalizing the Interim Agreement with a view to concluding a mutually beneficial BTA consistent with the roadmap agreed in the Terms of Reference,” the statement said.
