US-India Strike Interim Trade Deal, Tariffs Cut To 18% In Economic Reset

The deal, unveiled in a joint statement by The White House, is being positioned as a bridge to a comprehensive US-India Bilateral Trade Agreement (BTA).

07 Feb 2026, 03:05 · NDTV

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The US and India announced a framework for an Interim Agreement on reciprocal trade
US tariffs on Indian goods will be cut from 50% to 18% under the new agreement
India will reduce tariffs on US industrial, food, and agricultural products

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In a significant recalibration of one of the world's most consequential economic relationships, the United States and India on Saturday announced a framework for an Interim Agreement on reciprocal and mutually beneficial trade, cutting overall US tariffs on Indian goods from 50% to 18% and unlocking wide-ranging market access commitments on both sides.

The deal, unveiled in a joint statement by The White House, is being positioned as a bridge to a comprehensive US-India Bilateral Trade Agreement (BTA).

The announcement follows days after Donald Trump publicly signalled a breakthrough in negotiations with New Delhi, calling the outcome "balanced and tough but fair."

For India, the tariff rollback marks the sharpest easing of US trade barriers in years; for Washington, it delivers long-sought concessions on market access, standards, and non-tariff barriers in one of the fastest-growing major economies.

At its core, the Interim Agreement reaffirms the commitment made when Trump and Prime Minister Narendra Modi launched BTA talks in February 2025. Officials on both sides said the framework sets "concrete outcomes" that can be implemented quickly while negotiators continue work on a deeper, more durable trade pact aimed at resilient supply chains and economic security alignment.

Tariffs Down, Access Up

Under the framework, India will eliminate or reduce tariffs on all US industrial goods and a broad range of food and agricultural products. The list spans dried distillers' grains, red sorghum for animal feed, tree nuts, fresh and processed fruits, soybean oil, wine and spirits, items that US exporters have long argued were constrained by high duties and regulatory frictions.

In return, the United States will apply a reciprocal tariff rate of 18% on Indian-origin goods, a dramatic cut from the earlier 50%. The reduction covers major Indian export sectors including textiles and apparel, leather and footwear, plastics and rubber, organic chemicals, home decor, artisanal products, and certain machinery. Subject to the successful conclusion of the Interim Agreement, Washington also committed to remove reciprocal tariffs on a wide range of goods identified for "aligned partners," notably generic pharmaceuticals, gems and diamonds, and aircraft parts.

The agreement goes further by unwinding certain national security-related tariffs. The US will remove duties on select Indian aircraft and aircraft parts imposed under earlier proclamations covering aluminium, steel, and copper. India, for its part, will receive a preferential tariff-rate quota for automotive parts subject to US national security tariffs. Negotiated outcomes on generic pharmaceuticals and ingredients will hinge on the findings of an ongoing US Section 232 investigation.

Non-Tariff Barriers In Focus

Beyond tariffs, the framework takes aim at non-tariff barriers that have dogged bilateral trade. India agreed to address long-standing concerns over medical devices, streamline restrictive import licensing for information and communication technology (ICT) goods, and within six months of the agreement's entry into force, determine whether US-developed or international standards can be accepted for exports in identified sectors. New Delhi also committed to tackling non-tariff barriers affecting US food and agricultural products, an area that has seen repeated disputes over standards and approvals.

Both sides will discuss standards and conformity assessment procedures to ease compliance costs, and they agreed on rules of origin designed to ensure the benefits of the pact accrue primarily to US and Indian firms. Importantly, the framework includes a safeguard clause allowing either side to modify commitments if the other changes agreed tariffs.

Big-Ticket Purchases And Tech Push

One of the most eye-catching elements is India's stated intent 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. Officials said trade in technology products, including graphics processing units (GPUs) and equipment used in data centres, will rise sharply, alongside expanded joint technology cooperation.

The Interim Agreement also signals a shared push on digital trade. Washington and New Delhi committed to addressing discriminatory or burdensome practices and to charting a path toward robust digital trade rules as part of the BTA, an area increasingly central to services, data flows, and innovation.

Geopolitics And Supply Chains

Taken together, the framework underscores a broader strategic alignment. The two countries agreed to strengthen economic security cooperation to counter non-market policies of third parties, coordinate on investment reviews and export controls, and bolster supply chain resilience. In the current global context, marked by trade fragmentation and geopolitical competition, officials described the pact as both an economic and strategic statement.

What Comes Next

The joint statement said the framework will be implemented promptly, with negotiators working toward finalizing the Interim Agreement and concluding a mutually beneficial BTA consistent with an agreed roadmap. The United States affirmed it would consider India's request for further tariff reductions during the BTA talks.

Markets and industry groups in both countries are now parsing the fine print, weighing near-term gains against the pace of implementation. If delivered as promised, the Interim Agreement could reset US-India trade ties, inject momentum into stalled negotiations, and signal that despite global trade headwinds, two major economies are willing to meet in the middle.

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