ECONOMY
India, US unveil interim deal, tariff on Indian exports cut to 18%, India to buy $500-bn US goods
- IBJ Bureau
- Feb 08, 2026
India and the US have taken a major step forward with the announcement of an India-US trade deal framework designed to lower tariffs, strengthen energy ties and boost economic cooperation.
The joint statement from both the governments confirm that while the framework sets a clear path, further negotiations will be needed to finalise a comprehensive bilateral trade agreement, which may be announced by March this year.
US President Donald Trump had announced earlier that the US would cut tariffs on Indian goods from 50 to 18 per cent as a part of the India-US trade deal in exchange for India halting purchases of Russian oil and lowering trade barriers.
Mr Trump has signed an executive order, removing the 25 per cent portion of the “Russian punitive tariff” after India agreed to shift oil imports from Russia to the US and Venezuela.
The India-US framework provides specific trade commitments. India has agreed to purchase $500 billion in US goods over five years, including oil, gas, coking coal, aircraft and aircraft parts, precious metals and technology products, such as graphics processing units used for AI and other data centre applications.
India will also reduce or eliminate tariffs on a wide range of US industrial and agricultural products, including dried distillers’ grains, red sorghum, tree nuts, fresh and processed fruits, soybean oil, wine, and spirits.
Under the India-US trade deal, the US will maintain an 18 per cent tariff on most imports from India, covering textiles, apparel, leather, footwear, plastics, organic chemicals, home decor, artisanal goods, and certain machinery. India will also receive tariff relief on certain aircraft and aircraft parts, along with a lower-tariff quota for auto parts imports. Outcomes for generic pharmaceuticals and their ingredients will be negotiated based on on-going US tariff investigations.
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