The interim trade agreement eases the tariff burden between India and the US.

After months of intense negotiations amid growing diplomatic strain, India and the United States have finally reached a consensus on an interim trade framework, offering significant relief to Indian exporters. The breakthrough came following discussions between Prime Minister Narendra Modi and former US President Donald Trump, who agreed to mend bilateral ties by rolling back several punitive tariff measures imposed over the past year.

As part of the interim agreement, the US has decided to cap tariffs on Indian exports at 18 percent, down from the earlier 25 percent. The move is expected to provide a substantial boost to Indian exporters, particularly MSMEs, farmers, and fishermen. The framework is also projected to generate lakhs of new jobs, opening fresh opportunities for women and youth across multiple sectors.

Under the revised tariff structure, several key product categories will now enjoy zero-duty access. These include generic pharmaceuticals, gems and diamonds, aircraft parts, and related components. These sectors will benefit significantly from exemptions under Section 232, translating into tangible export gains for Indian sellers.

In addition, industries such as textiles and apparel, leather and footwear, plastic and rubber products, organic chemicals, home décor, and artisanal goods are also expected to gain from the interim trade arrangement.

In another major development, Trump signed an executive order removing the additional 25 percent tariff imposed on Indian goods over India’s purchase of Russian oil. This surcharge will be withdrawn with immediate effect, marking a crucial step toward reviving the long-pending India–US trade partnership.

According to reports, India has assured the US administration that it will gradually halt purchases of Russian Federation oil and instead prioritize energy imports from the United States. India has also committed to expanding defence cooperation with Washington under a long-term framework spanning the next decade.

It may be recalled that Indian exports were earlier subjected to tariffs as high as 50 percent following stringent measures announced by Trump last summer the highest levy imposed on any Asian trading partner of the US at the time.

Welcoming the development, Union Commerce and Industry Minister Piyush Goyal said the interim trade framework would unlock access to the $30 trillion US market for Indian exporters. Prime Minister Narendra Modi also hailed the agreement, calling it “great news” for both nations and a positive step toward strengthening bilateral economic ties.

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