India-US Trade Deal: America has decided to remove the duties imposed in the name of national security on some aircraft and aircraft parts coming from India.

India-US Interim Trade Agreement

India and the United States have finalized an interim trade agreement framework to give a new direction to bilateral trade. The agreement aims to reduce tariff and non-tariff barriers between the two countries, increase market access, and lay the foundation for a future comprehensive bilateral trade agreement (BTA). Both countries have clarified that this framework will be implemented soon and will proceed towards a final agreement according to the established roadmap.

Under this interim agreement, India has agreed to eliminate or reduce tariffs on all US industrial goods. This will also provide easier access to the Indian market for several US food and agricultural products, including dried distillers' grains used in animal feed, red sorghum, nuts, fresh and processed fruits, soybean oil, wine, spirits, and other agricultural products. This will directly impact Indian import policy and provide consumers with more options.

The key terms of the US-India interim agreement are as follows:

• India will eliminate or reduce tariffs on all US industrial goods and certain US food and agricultural products, including dried distillers' grains (DDGs), red sorghum for animal feed, nuts, fresh and processed fruits, soybean oil, wine and spirits, and other products.

• The United States, under Executive Order 14257 (Reciprocal Tariff Regulations to Reduce the Trade Deficit) of April 2, 2025, will impose an additional duty of 18 percent on products originating from India, including clothing and apparel, leather and footwear, plastics and rubber, organic chemicals, home furnishings, handcrafted products, and certain machinery. Furthermore, following an interim agreement, additional duties imposed on items listed in Executive Order 14346 of September 5, 2025, including generic drugs, gemstones and diamonds, and aircraft parts, will be removed.

• The United States will remove tariffs imposed on certain Indian aircraft and aircraft parts for national security reasons. Similarly, India will be granted preferential tariff quotas on automobile parts, consistent with US national security requirements. Furthermore, tariffs on pharmaceuticals and their derivatives will be determined based on the findings of the US Section 232 investigations.

• The United States and India are committed to providing each other with preferential market access on an ongoing basis in areas of mutual interest.

• Both countries will establish such rules of origin that the benefits of the agreement will mainly go to America and India.

• The United States and India will eliminate non-tariff barriers affecting bilateral trade. India agreed to remove long-standing barriers to trade in U.S. medical devices, simplify import licensing procedures for ICT products, and determine within six months whether U.S. or international standards will be acceptable in the Indian market. India will also eliminate non-tariff barriers to U.S. food and agricultural products.

• With a view to facilitating compliance with technical regulations, the two countries will discuss standards and conformity assessment procedures in mutually agreed areas.

• If any change is made in the fixed duty by any country, then the other country will also be able to amend its commitments.

• The United States and India will work to further expand market access opportunities through BTA negotiations. During this period, the United States will consider India's request to reduce tariffs on Indian goods.

• The two countries will strengthen economic security cooperation to promote supply chain resilience and innovation, and cooperate in the areas of addressing third-party non-market policies, investment review, and export controls.

• India intends to purchase $500 billion worth of energy products, aircraft and their components, precious metals, technology products, and coking coal from the United States over the next five years. The two countries will increase trade in technology products, particularly graphics processing units (GPUs) and other data center-related products, and expand joint technical cooperation.

• The United States and India are committed to eliminating discriminatory or burdensome procedures and other barriers to digital trade and establishing strong, ambitious, and mutually beneficial digital trade rules under the BTA. The United States and India will expeditiously implement this framework and expeditiously finalize an interim agreement with the aim of concluding a mutually beneficial BTA, consistent with the roadmap set out in the Terms of Reference.