India–US interim trade framework finalised, marks major diplomatic and economic reset

The India–US interim trade deal slashes tariffs, boosts exports, safeguards farmers, and marks a major diplomatic reset between PM Modi and Trump

PGurus Newsdesk

February 7, 2026

The pact would also see Washington cutting so-called "reciprocal" levies on Indian products to 18 percent, down from a 25-percent level

India–US trade breakthrough: Tariffs cut, markets opened, strategic ties reset

Joint statement issued after year-long negotiations launched by PM Modi–Trump in 2025

India and the United States have formally agreed on a framework for an interim trade agreement, marking a significant milestone in bilateral economic relations and underscoring New Delhi’s calibrated diplomacy amid global geopolitical churn.

The White House released a Joint Statement confirming that both sides will “promptly implement” the framework and work toward finalising an Interim Agreement as a stepping stone to a broader Bilateral Trade Agreement (BTA). The negotiations were originally launched by Prime Minister Narendra Modi and US President Donald Trump on February 13, 2025.

Tariff Relief: Major Boost for Indian Exporters

Under the interim framework:

The US will cut reciprocal tariffs on Indian goods to 18%, down from 25%
Certain tariffs will be reduced to zero, including on:
Generic pharmaceuticals
Gems and diamonds
Aircraft and aircraft parts

Commerce and Industry Minister Piyush Goyal said the agreement opens up access to a $30 trillion US market, particularly benefiting MSMEs, farmers, fishermen, and labour-intensive sectors.

“Under the decisive leadership of PM Narendra Modi, India has secured meaningful market access while protecting core national interests,” Goyal said.

Key beneficiary sectors include textiles and apparel, leather and footwear, plastics and rubber, organic chemicals, home décor, artisanal goods, select machinery, and engineering products.

India’s Strategic Diplomacy: Protecting Farmers and Rural Economy

A central pillar of India’s negotiating position was the complete protection of sensitive agriculture and dairy sectors. According to the joint framework and government statements, India has safeguarded:

Maize, wheat, rice, and soya
Poultry, milk, cheese, and meat products
Ethanol (fuel), tobacco, and select vegetables

Despite US demands, India ensured that price-sensitive agriculture and dairy markets remain insulated, preserving rural livelihoods and domestic food security.

This outcome reflects New Delhi’s long-standing stance that agriculture is non-negotiable in trade talks — a position consistently maintained across administrations.

US Market Access Gains and Reciprocal Commitments

While India secured tariff relief, it also offered calibrated access to US goods:

India will eliminate or reduce tariffs on US industrial goods
Selected US agricultural products will receive access, including:
Dried distillers’ grains (DDGs)
Red sorghum for animal feed
Tree nuts
Fresh and processed fruits
Soybean oil
Wine and spirits

Both countries committed to providing preferential market access on a sustained basis in sectors of mutual interest.$500 Billion Purchase Commitment and Strategic Trade Expansion

According to the joint statement:

India intends to purchase $500 billion worth of US goods over the next five years, including:

Energy products
Aircraft and aircraft parts
Precious metals
Technology products
Coking coal

The two sides also agreed to:

Expand trade in advanced technology products, including GPUs and data centre equipment
Enhance defence cooperation over the next 10 years
Address barriers to digital trade and create a pathway toward robust digital trade rules under the final BTA

Competitive Edge for Indian Exporters

Trade analysts noted that the 18% tariff rate gives Indian exporters a marginal advantage over competitors such as Vietnam and Bangladesh, which face duties of around 19–20%.

Wendy Cutler, Senior Vice President at the Asia Society Policy Institute, said the deal positions India favourably within US supply chains at a time of global trade realignments.

A Reset in India–US Economic Relations

The interim trade framework marks a decisive reset after months of uncertainty, reinforcing India’s image as a firm but pragmatic negotiator.

By securing tariff relief, protecting farmers, navigating energy geopolitics, and expanding strategic cooperation, New Delhi has leveraged diplomacy to translate geopolitical complexity into tangible economic gains — while keeping the door open for a comprehensive bilateral trade agreement in the near future.

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