Big tariff relief, big questions: What’s inside India–US trade deal framework

India and the United States have reached a framework for an interim trade agreement that lowers American tariffs on a wide range of Indian exports, while tying future concessions to New Delhi’s energy sourcing choices.

The announcement was made through a joint statement issued by the White House on Saturday.

Under the arrangement, Washington has withdrawn the additional 25% punitive tariff imposed on India and reduced the reciprocal tariff from 25% to 18%.

US President Donald Trump signed an executive order formally removing the punitive duty.

India’s oil purchases

In the order, Trump said India has committed to stop directly or indirectly importing Russian oil, will purchase US energy products, and has agreed to a framework with Washington to expand defence cooperation over the next 10 years.

"Specifically, India has committed to stop directly or indirectly importing Russian Federation oil, has represented that it will purchase United States energy products from the United States, and has recently committed to a framework with the United States to expand defence cooperation over the next 10 years," Trump said in the executive order.

If the US Secretary of Commerce finds that India has resumed directly or indirectly importing Russian oil, Trump's team shall recommend "whether and to what extent I should take additional action as to India, including whether I should reimpose the additional ad valorem rate of duty of 25% on imports of articles of India," the order said.

Indian officials, however, did not directly confirm Trump’s assertion on Russian oil.

When asked, an official pointed to earlier remarks by External Affairs Ministry spokesperson Randhir Jaiswal, who said India’s primary objective remains ensuring energy security for its 1.4 billion people.

"Insofar as India's energy sourcing is concerned, the government has stated publicly on several occasions that ensuring the energy security of 1.4 billion Indians is the supreme priority of the government," Jaiswal had said.

"Diversifying our energy sourcing in keeping with objective market conditions and evolving international dynamics is at the core of our strategy to ensure this. All of India's actions are taken and will be taken with this in mind," he said.

India’s purchase of Russian oil has been a recurring friction point in ties with Washington, with several American officials alleging that it supports Moscow’s war effort in Ukraine. New Delhi has rejected the charge, maintaining that its energy procurement is guided by national interest and market realities.

What the tariff reset means

India exported goods worth $86.35 billion to the United States in 2024, of which $40.96 billion were subject to reciprocal tariffs that went as high as 50% on several product categories.

Under the interim deal, tariffs on exports worth $30.94 billion have been reduced from 50% to 18%, while duties on another $10.03 billion have been cut from 50% to zero.

A zero reciprocal duty access has been assured for $1.04 billion under exemption categories, including agricultural products valued at $1.035 billion.

A further $28.30 billion in exports will receive zero reciprocal duty under Section 232 end-use provisions, removing additional levies that earlier could climb to 50%.

The framework also creates a clear tariff differential in India’s favour.

While duties on Indian products have been lowered to 18% or zero in many cases, competing suppliers continue to face higher tariffs, including China at 35%, Vietnam and Bangladesh at 20%, and Malaysia, Indonesia, the Philippines, Cambodia and Thailand at around 19%.

Sector-wise gains

The duties will be cut down on Indian goods including textile and apparel, leather and footwear, plastic and rubber, organic chemicals, home decor, artisanal products, and certain machinery.

Textiles and apparel emerge as major beneficiaries, with tariffs reduced from 50% to 18% and silk receiving zero-duty access. This opens enhanced opportunities in a US market valued at $113 billion.

Export categories expected to gain include readymade garments, carpets, man-made and cotton textiles, bed linen, curtains, yarn, baby clothing, blankets and gloves.

The leather and footwear sector also stands to gain significantly, with tariffs cut from 50% to 18%, improving access to a $42 billion US market.

Ramesh Kumar Juneja, chairman of the Council for Leather Exports (CLE) said the deal will help increase exports to about 30% in the first year after the implementation of the pact.

"At present, our exports to the US stood at about Rs 15,000 crore and about 42 lakh people are employed. The deal will give a major boost," he said.

In gems and jewellery, tariffs have similarly been reduced from 50% to 18%, alongside zero-duty access for diamonds, platinum and coins covering a $29 billion market.

The US gems and jewellery market is valued at $61 billion and Indian exporters of cut and polished diamonds, lab-grown stones, coloured gemstones and precious metal jewellery are expected to benefit.

The Gems and Jewellery Export Promotion Council (GJEPC) said the diamond sector had taken a severe hit over the past year, with India's cut and polished diamond exports to the US declining by over 60%, from $3.64 billion in April–December 2024 to $1.45 billion in April–December 2025, as tariffs eroded competitiveness.

"We are confident that, upon conclusion of the Interim Agreement, diamonds and coloured gemstones will receive full zero-duty treatment as envisaged, restoring competitiveness in our most critical market," it said.

Home décor exports will see tariffs drop from 50% to 18% for products such as furniture, cushions, quilts and lamps.

Zero-duty access has also been secured for items like seats, chandeliers and illuminated signs.

Toy exports will now face an 18% tariff instead of 50%.

Machinery and parts, excluding aircraft components, will also benefit from tariff reductions from 50% to 18%.

India currently exports $2.35 billion worth of machinery to the US, with the revised duty structure expected to enhance competitiveness across multiple categories.

Agriculture

India maintains a $1.3 billion agricultural trade surplus with the United States, exporting $3.4 billion and importing $2.1 billion in 2024.

Under the agreement, the US will apply zero additional duty on Indian agricultural exports worth $1.36 billion, including spices, tea, coffee, coconut products, nuts, fruits, vegetables, cereals, cocoa, seeds and processed foods.

Within this, agricultural products valued at $1.035 billion have been assured zero reciprocal tariff to provide predictability for farmers and exporters.

India has agreed to provide import duty concessions to certain US agricultural products such as dried distillers' grains (DDGs), red sorghum and apples for animal feed.

India currently produces about 7.5 to 8 million tonnes of DDGS, a byproduct of maize and rice, which replaces soya and rapeseed meal. DDGS utilisation as a feed ingredient is well documented as both an energy and a protein supplement.

Commerce Minister Piyush Goyal said that India will provide quota-based tariff concessions on US agricultural products such as DDGs, soybean oil, apples, long staple cotton and soybean oil.

"We have opened our markets for the US in a calibrated manner on some products like Distiller's Dried Grains with Solubles (DDGS), wines and spirits in which we have kept a minimum import price also," Goyal said.

When asked if DDG's have GM (genetically modified) soymeal, the minister assured that the environment ministry has prescribed processes on allowing the import of GM materials in India, which will be followed.

The Soybean Processors Association of India (SOPA) Executive Director DN Pathak raised another concern that India has not currently permitted GM-DDGS.

"There is no clarity as of now whether GM or non-GM DDGS will be permitted from the US. Whether there will be a quota or not, there is no clarity," he said.

At the same time, highly sensitive sectors such as meat, poultry, dairy, GM foods, millets, pulses, oilseeds, honey, ethanol and tobacco remain protected.

"The agreement reflects India's commitment to safeguarding farmers' interests and sustaining rural livelihoods by completely protecting sensitive agricultural and dairy products, including maize, wheat, rice, soya, poultry, milk, cheese, ethanol (fuel), tobacco, certain vegetables and meat," Goyal said in a social media post.

What remains unclear is whether American soybean oil will be allowed on a quota basis with nil basic customs duty, and whether the 6.5% agri and education cess will be exempted.

"We will have to see if cess will be reduced or removed," BV Mehta, Executive Director, Solvent Extractors Association of India (SEA), said.

He added that US soybean oil imports could reduce shipments from Argentina and potentially impact palm oil prices.

Zero-duty access for $38 billion in industrial exports

The agreement also secures zero additional duty for industrial exports valued at $38 billion.

Aircraft parts, machinery components, generic drugs, pharmaceutical ingredients and elementary auto parts will receive zero-duty treatment. Zero-duty access also extends to gems and diamonds, watches, essential oils, inorganic chemicals, plastics, paper products, wood articles and natural rubber.

Wines and spirits

According to the trade deal framework, American goods ranging from wines and spirits to dry fruits will enter India either duty-free or at reduced import tariffs.

Domestic spirits makers' body CIABC on Saturday said it expects tariffs on spirituous beverages to be aligned with India’s recently signed free trade agreements (FTAs) with the UK and the EU.

Urging the Indian government to ensure a "fair and level-playing field against imports", the Confederation of Indian Alcoholic Beverage Companies (CIABC) said it hopes the deal will be "equitable and mutually beneficial" for both nations.

CIABC, which represents home-grown Indian Made Foreign Liquor (IMFL) players, said it is not against reduction" in import duty, but wants it in a "phased manner".

"It hopes that the Government will address issues raised by CIABC relating to removal of non-tariff barriers across FTAs and ensure a fair and level-playing field against imports," said its DG Anant S Iyer.

Farmer outfits call for protests

Several farmer organisations, including the Samyukt Kisan Morcha (SKM), criticised the India-US trade deal and said protests against it will be held across the country.

SKM alleged that the proposed interim trade agreement framework between India and the United States amounted to a "total surrender" of Indian agriculture to American multinational corporations and demanded the immediate resignation of Commerce Minister Piyush Goyal.

Addressing an online press conference, SKM leaders said protests would be held across the country in villages, and they would burn effigies of US President Donald Trump and Prime Minister Narendra Modi. The SKM also extended its support to the February 12 general strike.

All India Kisan Sabha (AIKS) leader Krishna Prasad said the trade deal will have a deep impact on the agriculture sector by opening market for items like dried distillers' grains, red sorghum for animal feed and soybean oil, and also claimed it would impact the dairy sector.