India–US Interim Trade Pact Sets 18 Percent Tariff Framework, Opens Path for USD 500 Billion Purchases

New Delhi, February 7, 2026 (Saturday) India and the United States have announced a framework for an Interim Trade Agreement, marking a significant step in bilateral economic engagement and setting the stage for deeper cooperation under a proposed Bilateral Trade Agreement. The interim framework outlines reciprocal tariff adjustments, market access commitments, and a roadmap for expanded trade and technology cooperation between the two countries.

Interim Agreement Anchors Reciprocal Tariff Commitments​

Under the framework, India has committed to eliminate or reduce tariffs on all US industrial goods and a wide range of American food and agricultural products. These include dried distillers’ grains, red sorghum for animal feed, tree nuts, fresh and processed fruits, soybean oil, wine and spirits, along with additional identified products.

On the other side, the United States will apply a reciprocal tariff rate of 18 percent on originating Indian goods. The tariff coverage includes textiles and apparel, leather and footwear, plastic and rubber products, organic chemicals, home décor items, artisanal products, and select categories of machinery.

Subject to the successful conclusion of the Interim Agreement, the US will subsequently remove reciprocal tariffs on a broader set of Indian exports. These include generic pharmaceuticals, gems and diamonds, and aircraft parts, providing relief to several export-oriented Indian sectors.

Aircraft, Metals, and Automotive Concessions​

The framework also provides for the removal of US tariffs on certain Indian aircraft and aircraft parts that were earlier imposed under national security-related import adjustment measures covering aluminium, steel, and copper.

In addition, India will receive a preferential tariff-rate quota for automotive parts exported to the US. This concession remains subject to national security requirements and applicable investigations. For pharmaceuticals and pharmaceutical ingredients, negotiated outcomes will be extended to India based on the findings of ongoing US reviews.

Non-Tariff Barriers and Standards Alignment​

Both countries have agreed to address non-tariff barriers that have affected bilateral trade flows. India has committed to resolving long-standing market access issues related to US medical devices, easing restrictive import licensing procedures, and reviewing quantitative restrictions on select goods.

Within six months of the agreement entering into force, India will assess the acceptability of US-developed or international standards, including testing requirements, for identified sectors such as information and communication technology products. Similar efforts will be undertaken to address non-tariff barriers impacting US food and agricultural exports.

The two sides will also engage in discussions on standards and conformity assessment procedures to improve regulatory alignment and ease compliance for businesses operating across borders.

USD 500 Billion Purchase Plan and Technology Push​

A key highlight of the framework is India’s stated intention to purchase USD 500 billion worth of US goods over the next five years. The proposed purchases span energy products, aircraft and aircraft parts, precious metals, technology products, and coking coal.

Trade in advanced technology products is set to expand significantly, including graphics processing units and other equipment used in data centres. The framework also emphasises joint technology cooperation, reflecting the strategic importance of supply chain resilience and innovation.

Digital Trade and Economic Security Focus​

India and the US have committed to address discriminatory or burdensome practices that hinder digital trade. The two countries aim to establish a clear pathway toward robust, ambitious, and mutually beneficial digital trade rules as part of the broader Bilateral Trade Agreement negotiations.

The framework further highlights cooperation on economic security, including coordinated approaches to supply chain resilience, investment reviews, export controls, and addressing non-market policies of third parties.

Road Ahead​

Both governments have agreed to promptly implement the interim framework and work toward finalising the Interim Trade Agreement. The longer-term objective remains the conclusion of a comprehensive Bilateral Trade Agreement that delivers reciprocal, balanced, and outcome-oriented trade growth.