US and India Announce Landmark Interim Trade Framework
In a significant diplomatic move, India and the United States released a joint statement early Saturday, unveiling the details of an "interim" framework that marks a pivotal step in their economic partnership. This announcement reveals the key terms of the "Interim Agreement" between the two nations, setting the stage for enhanced trade relations and mutual benefits.
Full Text of the Joint Statement
The United States of America and India are pleased to announce that they have reached a framework for an Interim Agreement regarding reciprocal and mutually beneficial trade. Today’s framework reaffirms the countries’ commitment to the broader U.S.-India Bilateral Trade Agreement (BTA) negotiations, which were launched by President Donald J. Trump and Prime Minister Narendra Modi on February 13, 2025. This broader agreement will include additional market access commitments and support more resilient supply chains.
The Interim Agreement between the United States and India represents a historic milestone in our countries’ partnership, demonstrating a common commitment to reciprocal and balanced trade based on mutual interests and concrete outcomes.
Key Terms of the Interim Agreement
Tariff Reductions and Market Access:
- India will eliminate or reduce tariffs on all U.S. industrial goods and a wide range of U.S. food and agricultural products. This includes items such as dried distillers’ grains (DDGs), red sorghum for animal feed, tree nuts, fresh and processed fruit, soybean oil, wine and spirits, and additional products.
- The United States will apply a reciprocal tariff rate of 18 percent on originating goods of India, including textile and apparel, leather and footwear, plastic and rubber, organic chemicals, home décor, artisanal products, and certain machinery. Subject to the successful conclusion of the Interim Agreement, the U.S. will remove the reciprocal tariff on a wide range of goods, including generic pharmaceuticals, gems and diamonds, and aircraft parts.
National Security and Tariff Adjustments:
- The United States will remove tariffs on certain aircraft and aircraft parts of India that were imposed to address national security threats. Similarly, India will receive a preferential tariff rate quota for automotive parts, contingent on U.S. national security requirements.
- Contingent on the findings of the U.S. Section 232 investigation of pharmaceuticals and pharmaceutical ingredients, India will receive negotiated outcomes with respect to generic pharmaceuticals and ingredients.
Non-Tariff Barriers and Standards:
- The United States and India commit to addressing non-tariff barriers that affect bilateral trade. India agrees to address long-standing barriers to the trade in U.S. medical devices and eliminate restrictive import licensing procedures for U.S. Information and Communication Technology (ICT) goods.
- India will determine, within six months of the Agreement's entry into force, whether U.S.-developed or international standards are acceptable for U.S. exports entering the Indian market in identified sectors.
Economic Security and Future Commitments
Supply Chain Resilience and Investment:
- The United States and India agree to strengthen economic security alignment to enhance supply chain resilience and innovation. This includes complementary actions to address non-market policies of third parties, as well as cooperation on inbound and outbound investment reviews and export controls.
Trade Expansion and Digital Cooperation:
- India intends to purchase $500 billion of U.S. energy products, aircraft and aircraft parts, precious metals, technology products, and coking coal over the next 5 years. Both countries will significantly increase trade in technology products, including Graphics Processing Units (GPUs) and other goods used in data centers, and expand joint technology cooperation.
- The United States and India commit to addressing discriminatory or burdensome practices and other barriers to digital trade, aiming to achieve robust, ambitious, and mutually beneficial digital trade rules as part of the BTA.
Path Forward
The United States and India will promptly implement this framework and work towards finalizing the Interim Agreement. This effort is viewed as a crucial step toward concluding a mutually beneficial Bilateral Trade Agreement, consistent with the roadmap agreed in the Terms of Reference. The interim deal not only boosts immediate trade but also lays a solid foundation for long-term economic collaboration between the two global powers.
