Reciprocal Tariff Measures Outlined by Both Sides
Interim Agreement Linked to Ongoing BTA Negotiations
New Delhi: India and the United States today announced that they have reached a framework for an Interim Agreement regarding reciprocal and mutually beneficial trade. The framework was released by the Ministry of Commerce and Industry and relates to the broader U.S.–India Bilateral Trade Agreement (BTA) negotiations launched by US President Donald J. Trump and Prime Minister Narendra Modi on February 13, 2025. According to the joint statement, the framework reaffirms the two countries’ commitment to those negotiations, which are to include additional market access commitments and provisions aimed at supporting supply chains.
The joint statement said that the Interim Agreement, once concluded, will set out reciprocal trade commitments between the two sides based on mutual interests and specified outcomes. The framework outlines tariff-related measures, market access provisions, rules of origin, non-tariff barrier commitments and areas of economic and strategic cooperation.
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Under the proposed terms, India will eliminate or reduce tariffs on all industrial goods originating from the United States and on a wide range of US food and agricultural products. These products include dried distillers’ grains, red sorghum for animal feed, tree nuts, fresh and processed fruits, soybean oil, wine and spirits, along with other specified items.
The United States, in turn, will apply a reciprocal tariff rate of 18 per cent on originating Indian goods under Executive Order 14257 of April 2, 2025, which regulates imports through reciprocal tariffs to address United States goods trade deficits. The goods covered under this measure include textiles and apparel, leather and footwear, plastic and rubber products, organic chemicals, home décor items, artisanal products and certain categories of machinery. The statement further notes that, subject to the successful conclusion of the Interim Agreement, the United States will remove the reciprocal tariff on a range of Indian goods identified in the Potential Tariff Adjustments for Aligned Partners Annexe to Executive Order 14346 of September 5, 2025. These goods include generic pharmaceuticals, gems and diamonds, and aircraft parts.
The United States will also remove tariffs on certain aircraft and aircraft parts originating from India that were imposed under Proclamation 9704 of March 8, 2018, relating to aluminum imports, Proclamation 9705 of March 8, 2018, relating to steel imports, and Proclamation 10962 of July 30, 2025, relating to copper imports, all of which were issued to address national security findings. The statement adds that, consistent with US national security requirements, India will receive a preferential tariff rate quota for automotive parts that are subject to tariffs imposed under Proclamation 9888 of May 17, 2019, concerning automobile and automobile parts imports. It further states that, contingent on the findings of the US Section 232 investigation into pharmaceuticals and pharmaceutical ingredients, India will receive negotiated outcomes covering generic pharmaceuticals and their ingredients.
Both countries have agreed to provide each other with preferential market access in sectors of respective interest on a sustained basis. They have also agreed to establish rules of origin to ensure that the benefits of the Agreement accrue predominantly to the United States and India.
The framework includes commitments to address non-tariff barriers affecting bilateral trade. According to the statement, India has agreed to address long-standing barriers affecting trade in US medical devices and to eliminate restrictive import licensing procedures that delay market access for, or impose quantitative restrictions on, US information and communication technology goods. India has also agreed to determine, within six months of the entry into force of the Agreement and with a view toward a positive outcome, whether US-developed or international standards, including testing requirements, are acceptable for US exports entering the Indian market in identified sectors. The statement further notes that India has agreed to address long-standing non-tariff barriers affecting trade in US food and agricultural products.
For the purpose of enhancing compliance with applicable technical regulations, the United States and India have stated that they intend to discuss their respective standards and conformity assessment procedures in mutually agreed sectors. The framework also provides that, in the event of changes to agreed tariffs by either country, the other country may modify its commitments.
The two sides have stated that they will work toward further expanding market access through the negotiations of the Bilateral Trade Agreement. The United States has affirmed that it intends to take into consideration, during those negotiations, India’s request that the United States continue to work to lower tariffs on Indian goods.
The joint statement also records that the United States and India have agreed to strengthen economic security alignment. This includes actions aimed at supply chain resilience and innovation, addressing non-market policies of third parties, and cooperation on inbound and outbound investment reviews and export controls.
According to the framework, India intends to purchase goods worth $500 billion from the United States over the next five years, including energy products, aircraft and aircraft parts, precious metals, technology products and coking coal. The two countries have also stated that they will increase trade in technology products, including graphics processing units and other goods used in data centres, and expand cooperation in technology.
In the area of digital trade, the United States and India have committed to addressing discriminatory or burdensome practices and other barriers and to establishing a pathway toward digital trade rules as part of the Bilateral Trade Agreement.
The statement concludes by noting that both sides will promptly implement the framework and work toward finalising the Interim Agreement, to conclude a mutually beneficial Bilateral Trade Agreement in line with the roadmap set out in the agreed Terms of Reference.
– global bihari bureau
