Commerce and Industry Minister Piyush Goyal has announced a significant breakthrough in India-US trade relations, revealing that tariffs imposed by the United States on Indian goods are expected to drop substantially to 18 percent within the coming week. This development follows productive negotiations between the two economic powerhouses.
Imminent Tariff Reduction Through Executive Action
During a press briefing on Thursday, Minister Goyal confirmed that the United States will implement this tariff reduction through a White House executive order. The formal process will begin with the release of a joint statement between India and the US, which is anticipated within the next four to five days.
"All US trade deals have had joint statements. The joint statement related to the India-US agreement will come into effect in 4-5 days. It can be early too," explained Commerce Secretary Rajesh Agrawal, providing crucial context about the procedural timeline.
Formal Agreement Signing Targeted for Mid-March
Following the joint statement, both nations will work toward converting this understanding into a legally binding agreement. Minister Goyal has set a clear target for formalizing this arrangement, stating that India and the US will formally sign the first tranche of the trade agreement by mid-March.
Commerce Secretary Agrawal elaborated on the technical aspects, noting: "Once the joint statement is there, it has to be converted into a legal agreement. We are targeting mid-March to sign the legal agreement. That will give us the authority to reduce tariffs on our side. Because their tariffs are executive tariffs. Our tariffs are Most-Favoured-Nation (MFN) tariffs."
Substantial Import Commitments from India
As part of this evolving trade relationship, India has made substantial commitments to increase imports from the United States. Minister Goyal revealed that India will import at least $500 billion worth of energy, aircraft, and chips from the United States over the next five years.
This commitment translates to an annual purchase target of approximately $100 billion worth of American products. The import basket will be diverse and strategically important, including:
- Aircraft and aviation technology
- Advanced semiconductor chips
- Energy products including oil and nuclear materials
- Agricultural goods and commodities
- Precious metals and technology items
- Coal and other energy resources
Current Trade Context and Recent Developments
The tariff reduction represents a significant reversal from previous measures. The United States had imposed tariffs of 50 percent on Indian goods as recently as August 27, making the reduction to 18 percent a substantial improvement for Indian exporters.
Recent trade data highlights the importance of this relationship. In the fiscal year 2025, India imported $45.62 billion worth of American goods while exporting $86.51 billion to the United States, demonstrating a substantial trade surplus that both nations are working to balance through increased imports.
The trade deal framework was agreed upon earlier this week, with US President Donald Trump confirming that India would purchase over $500 billion worth of American products across multiple sectors. This comprehensive agreement covers energy, technology, agricultural products, and various other goods that will strengthen economic ties between the two democracies.
This development comes at a crucial time for both economies and represents a significant step forward in bilateral trade relations that have seen both challenges and opportunities in recent years. The structured approach—beginning with a joint statement, followed by executive action on tariffs, and culminating in a formal legal agreement—demonstrates the methodical planning behind this important economic partnership.
