India and US Reach Framework for First Phase of Trade Agreement
India and the US have recently announced the establishment of a framework for the initial phase of a bilateral trade agreement. This agreement aims at reducing import duties on various goods to enhance trade between the two nations.
The framework signifies the commitment of both countries to the broader US-India Bilateral Trade Agreement (BTA) negotiations, which were initiated by President Donald Trump and Prime Minister Narendra Modi on February 13, 2025, as per a joint statement.
Under this agreement, the US will decrease tariffs on Indian goods from 50 per cent to 18 per cent, while India will either eliminate or decrease import duties on all US industrial goods and a wide range of American food and agricultural products.
It is anticipated that the first phase of the pact will be finalized by mid-March, leading to the removal of duties on American goods by India.
Additionally, the US has lifted the 25 per cent tariffs on India for purchasing Russian oil, effective February 7, following India’s commitment to cease importing oil from Moscow directly or indirectly.
Prime Minister Narendra Modi mentioned that this interim trade pact will fortify ‘Make in India’ by creating new prospects for farmers and entrepreneurs, thereby generating employment opportunities for women and youth.
Commerce and Industry Minister Piyush Goyal highlighted that the interim agreement will grant Indian exporters, particularly MSMEs, farmers, and fishermen, access to a USD 30 trillion market, as US duties on Indian goods will be reduced to 18 per cent from the earlier 50 per cent.
This trade agreement is expected to boost exports in labor-intensive sectors such as textiles, apparel, leather, footwear, and various other industries. It will also lead to the elimination of tariffs on a wide array of goods, including generic pharmaceuticals, gems, diamonds, and aircraft parts, enhancing India’s export competitiveness.
The agreement emphasizes India’s commitment to safeguarding the interests of farmers by protecting sensitive agricultural and dairy products while promoting rural livelihoods.
Both countries have agreed to promptly implement this framework and strive towards finalizing the interim agreement to conclude a mutually beneficial Bilateral Trade Agreement (BTA).
US Trade Representative Ambassador Jamieson Greer commended President Donald Trump’s efforts, stating that the deal will unlock opportunities for American workers and producers by accessing one of the world’s largest economies.
The statement also highlights the resolve of India and the US to address long-standing barriers in trade, increase cooperation in technology products, and enhance ease of compliance with technical regulations.
During the years 2021-25, the US emerged as India’s largest trading partner in goods, accounting for a significant portion of India’s total exports and imports. The bilateral trade between the two nations in 2024-25 reached USD 186 billion.
This trade pact is poised to benefit both nations economically, leading to increased trade in various sectors and fostering stronger ties between India and the US.
