India–US Agree on Interim Trade Pact; Tariffs Cut, Strategic Purchases Planned

India and the United States have agreed on the terms of an Interim Agreement on reciprocal and mutually beneficial trade, marking a significant reset in bilateral economic ties, according to a joint statement issued on February 6.

As part of the broader economic engagement, India expressed its intention to purchase USD 500 billion worth of US goods over the next five years, including energy products, aircraft and aircraft parts, precious metals, technology products and coking coal.

Both sides agreed to significantly expand trade in technology products, particularly graphics processing units (GPUs) used in data centres, and to strengthen joint technology cooperation. The two countries also committed to addressing barriers to digital trade and outlined a pathway for mutually beneficial digital trade rules under the proposed bilateral trade agreement.

Protection for Sensitive Sectors

India has ensured protection for several sensitive agricultural and allied sectors under the interim agreement. Products excluded from import concessions include:

• Frozen and preserved vegetables such as potatoes, peas, cucumbers, gherkins, beans, mushrooms and mixed canned vegetables.
• Dairy products, including milk (liquid and powdered), cheese, cream, butter, yoghurt, buttermilk, whey products and ghee.
• Grains and cereals such as ragi, wheat, maize, millet, rice, barley, oats, sorghum, copra and various flours.
• Spices, including black pepper, dried chillies, cinnamon, coriander, cumin, asafoetida, ginger, turmeric, fenugreek, mustard and other powdered spices.

Tariff Liberalisation

India would eliminate or reduce tariffs on all US industrial goods and a wide range of US food and agricultural products, including dried distillers’ grains, red sorghum for animal feed, tree nuts, fruits, soybean oil, wine and spirits.

In a major relief for Indian exporters, US tariffs imposed on Indian goods since August 2025 have been reduced from 50 per cent to 18 per cent following the agreement.

The interim pact is seen as a stepping stone toward a comprehensive bilateral trade agreement, aimed at deepening economic integration, strengthening supply chains and boosting cooperation in critical and emerging technologies.