Reduced US tariffs of 18% on India come into effect. What it means
The agreement will reduce US reciprocal duties on Indian exports to 18 per cent, while scrapping tariffs entirely on items such as generic medicines, gems and diamonds, and aircraft components—opening up stronger export prospects across several key sectors.
Union Commerce and Industry Minister Piyush Goyal, in a press conference on Saturday, announced a major reset in India–US trade ties, confirming that steep American tariffs on Indian imports have been slashed from 50 per cent to 18 per cent, effective from noon on February 7. The move follows a framework interim trade agreement between the two countries under the broader India-US Bilateral Trade Agreement (BTA), aimed at boosting exports, jobs and market access. The trade deal will formally be signed in March.
Here are key details the Union Minister shared about the India-US trade deal:
The United States has lowered import duties on Indian goods from a punitive 50 per cent to 18 per cent, offering immediate relief to exporters. Piyush Goyal said the revised tariffs take effect from February 7, restoring India’s competitiveness in its largest export destination after months of elevated levies that strained trade flows.
India and the US have agreed on a framework for an interim trade pact focused on reciprocal and mutually beneficial outcomes. The arrangement serves as a stepping stone towards a comprehensive Bilateral Trade Agreement (BTA), with both sides committing to faster implementation and continued negotiations on market access and trade barriers.
The tariff cut is expected to significantly benefit labour-intensive Indian industries such as textiles, apparel, leather, footwear, plastics, rubber goods, organic chemicals, home décor, handicrafts and select machinery. Lower duties are likely to improve price competitiveness and expand order volumes from American buyers.
Under the agreement, tariffs will be eliminated entirely for several high-value Indian exports, including generic pharmaceuticals, gems and diamonds, and certain aircraft parts. These concessions are expected to deliver tangible gains for Indian manufacturers and reinforce the government’s 'Make in India' manufacturing push.
India will receive a preferential tariff-rate quota for automotive components, aligned with US national security rules. Exemptions under Section 232 for aircraft parts further enhance opportunities for Indian suppliers in global aerospace and auto supply chains, sectors with rising export potential.
As part of the interim framework, India will eliminate or reduce tariffs on all US industrial goods and a wide range of American agricultural and food products. These include animal feed, tree nuts, fruits, soybean oil, wine and spirits, with some duties scrapped immediately and others phased out over time.
India has expressed its intention to purchase around USD 500 billion worth of US goods over the next five years. This includes energy products, aircraft and aircraft parts, precious metals, technology items and coking coal, signalling deeper commercial engagement and long-term trade balancing efforts.
Both countries agreed to tackle long-standing non-tariff barriers affecting medical devices, ICT goods and agricultural trade. The pact also envisages greater cooperation in technology and digital trade, including data-centre equipment such as GPUs, alongside discussions on standards and conformity procedures.
In August last year, the US imposed a 25 per cent reciprocal tariff on Indian goods, followed by an additional 25 per cent levy linked to India’s continued purchase of Russian crude oil. The combined duties sharply raised tariffs to nearly 50 per cent, severely impacting Indian exporters and strained trade ties between the two countries.
Following months of negotiations and India’s commitment to stop direct or indirect imports of Russian oil, Washington rolled back the additional 25 per cent duty through an executive order. This, combined with the interim trade framework, brought overall US tariffs on Indian imports down from 50 per cent to 18 per cent.