India, United States Agree on Framework for Interim Trade Agreement, Set Stage for Broader BTA

New Delhi: India and the United States of America have reached a framework for an Interim Agreement on reciprocal and mutually beneficial trade, marking a significant step forward in bilateral economic ties and laying the groundwork for a comprehensive US-India Bilateral Trade Agreement (BTA), according to a joint statement released here on Saturday.

The framework reaffirms commitments made during the launch of BTA negotiations by Donald J. Trump and Narendra Modi on February 13, 2025, and is aimed at expanding market access, strengthening supply chain resilience and promoting balanced trade outcomes.

Under the proposed Interim Agreement, India will eliminate or reduce tariffs on all U.S. industrial goods and a broad range of US food and agricultural products, including animal feed grains, tree nuts, fruits, soybean oil, wine and spirits. In parallel, the United States will apply a reciprocal tariff rate of 18 percent on Indian-origin goods under existing executive orders, while committing—subject to successful conclusion of the Interim Agreement—to remove reciprocal tariffs on a wide range of Indian exports such as generic pharmaceuticals, gems and diamonds, and aircraft parts.

The United States will also remove tariffs on certain Indian aircraft and aircraft parts imposed earlier on national security grounds under steel, aluminium and copper-related proclamations. India, in turn, will receive preferential tariff-rate quotas for automotive parts, subject to US national security requirements. Negotiated outcomes on generic pharmaceuticals and ingredients will depend on the findings of the ongoing US Section 232 investigation.

Both sides have agreed to provide preferential market access on a sustained basis in sectors of mutual interest and to establish rules of origin ensuring that the benefits of the agreement accrue primarily to India and the United States. The framework also includes provisions to address non-tariff barriers, with India committing to resolve long-standing issues affecting US medical devices, information and communication technology goods, and food and agricultural products.

The two countries will also engage on standards and conformity assessment procedures to improve ease of compliance for exporters, and have agreed on safeguard provisions allowing tariff adjustments if either side changes agreed rates.

Beyond tariffs, the framework places strong emphasis on economic security and supply chain cooperation, including coordination on investment reviews, export controls and responses to non-market policies of third parties. The agreement also charts a pathway for digital trade rules, with both sides committing to address discriminatory or burdensome practices affecting cross-border digital commerce.

In a major commercial commitment, India said it intends to purchase $500 billion worth of U.S. energy products, aircraft and aircraft parts, precious metals, technology products and coking coal over the next five years. Both countries also agreed to significantly expand trade in advanced technology products, including graphics processing units (GPUs) and data centre-related equipment, alongside deeper joint technology cooperation.

The two governments said the framework will be implemented promptly, with negotiations continuing toward finalising the Interim Agreement and concluding a mutually beneficial BTA in line with the agreed roadmap.