The U.S. and India have reached a framework for an interim reciprocal trade agreement aimed at expanding market access and addressing long-standing tariff and non-tariff barriers between the two countries.
According to a fact sheet published by the White House on Monday, President Donald Trump confirmed the framework in a joint statement issued Friday following discussions with Indian Prime Minister Narendra Modi. The two leaders agreed to pursue an interim agreement as a step toward a broader U.S.-India bilateral trade agreement.
How Do Tariffs Change Under the Framework?
President Trump signed an executive order approving the removal of the additional 25 percent tariff on Indian imports after India committed to ending its purchases of Russian Federation oil. Furthermore, the U.S. will lower its reciprocal tariff on Indian goods from 25 percent to 18 percent. In exchange, India agreed to remove or lower tariffs on U.S. industrial goods and multiple agricultural and food products, including dried distillers’ grains, nuts, fruit, soybean oil, wine and spirits.
What Commitments Did India Make?
India is committed to expanding purchases of U.S. goods, including energy, information and communication technology, and agriculture and coal products, with total purchases exceeding $500 billion. The framework also addresses non-tariff barriers and outlines negotiations on rules of origin to ensure benefits accrue primarily to both countries.
In addition, India agreed to eliminate its digital services taxes and engage in talks on bilateral digital trade rules. Both countries also committed to expanding technology trade, strengthening supply chain coordination and aligning on investment reviews and export controls.
What Are the Next Steps for the Bilateral Trade Agreement?
In the coming weeks, negotiators will address remaining tariff and non-tariff barriers, intellectual property rights, regulatory and customs matters, labor and environmental standards, unfair trade practices, and government procurement rules.