US and India Announce Interim Trade Deal to Advance Bilateral Trade Agreement Talks

The United States and India have announced an interim trade agreement to advance the bilateral trade agreement (BTA) negotiations, which began in February 2025 under US President Donald Trump and Indian Prime Minister Narendra Modi.

The interim agreement between the United States and India is stated to represent a historic milestone in trade, demonstrating a shared commitment to mutual benefit and balanced trade.

As part of the agreement, India will eliminate or reduce tariffs on a wide range of American industrial goods and US food and agricultural products, including dried grains, tree nuts, fresh and processed fruits, soybean oil, and wine.

According to the joint statement, the United States will impose reciprocal duties of 18 percent on Indian goods covering relevant executive orders encompassing textiles, leather footwear, plastics, rubber, organic chemicals, home decor, and certain machinery sectors.

“Upon the successful conclusion of the interim agreement, the US will remove reciprocal tariffs on a wide range of goods, including generic pharmaceuticals, gems and diamonds, and aircraft parts.”

The agreement also provides for the removal of some US tariffs on Indian aircraft and aircraft parts imposed under national security proclamations on aluminum, steel, and copper. India will receive preferential tariff rates for automotive parts in line with US national security requirements.

The statement noted that based on the results of US investigations, India is also prepared to obtain outcomes from negotiations for generic drugs and pharmaceutical ingredients. Both countries are committed to providing market access in areas of sustainable mutual interest to each other and establishing rules of origin to ensure the benefits of the agreement accrue to the United States and India.

Both sides will address non-tariff barriers affecting bilateral trade, the statement noted. India has agreed to review the acceptance of international standards within six months to take steps to address long-standing barriers in areas such as US medical devices, information and communication technology goods, and food and agricultural products.

In addition to the interim agreement, both countries stated they would work to further expand market access through BTA negotiations. During the talks, the US indicated it would consider India's request to continue efforts to reduce tariffs on Indian goods.

The agreement is stated to strengthen economic security, including resilience in supply chains, investment reviews, export controls, and cooperation in addressing the non-market policies of third parties.

Under the agreement, India expressed its intent to purchase US energy products, aircraft and aircraft parts, precious metals, and coal worth $500 billion over the next five years. Both sides agreed to significantly increase trade in technology products, including graphics processing units used in data centers, and to expand joint technological cooperation.

The United States and India are committed to addressing barriers to digital trade and paving the way for strong, mutually beneficial digital trade rules under the BTA.

It was stated that both parties will work expeditiously to finalize the interim agreement with a view to concluding a comprehensive and mutually beneficial bilateral trade agreement, as agreed by both sides, and implement this agreement immediately.