The United States announced an ‘interim’ trade deal with India on Saturday morning — slashing tariffs to 18% for key exports. The agreement will also see New Delhi reduce tariffs on all US industrial goods and lower duties on a wide range of American food and agricultural products. A separate order from the White House revoked earlier sanctions against the country for the purchase of Russian oil — claiming that India had committed to an import halt and pledged to US energy purchases.
“The United States and India commit to provide each other preferential market access in sectors of respective interest on a sustained basis…They will work towards further expanding market access opportunities through the negotiations of the BTA,” read an excerpt from the White House statement.
US President Donald Trump had first announced the trade deal via Truth Social on Monday following a call with Prime Minister Narendra Modi. The POTUS said he had spoken to the Indian leader (one of his “greatest friends” and a “powerful, respected” official) about a wide range of issues. Trump had claimed at the time that Modi had also “agreed to stop buying russian oil, and to buy much more from the United States and, potentially, Venezuela”.
“We agreed to a Trade Deal between the United States and India, whereby the United States will charge a reduced Reciprocal Tariff, lowering it from 25% to 18%. They will likewise move forward to reduce their tariffs and non-tariff barriers against the United States to zero. The Prime Minister also committed to ‘buy American’ at a much higher level, in addition to over $500 billion of US energy, technology, agricultural, coal, and many other products,” Trump had announced on Tuesday.
What does India gain under the US trade deal?
“The United States will apply a reciprocal tariff rate of 18% on originating goods of India…and, subject to the successful conclusion of the Interim Agreement, will remove the reciprocal tariff on a wide range of goods…It will also remove tariffs on certain aircraft and aircraft parts of India imposed to eliminate threats to national security. India will receive a preferential tariff rate quota for automotive parts subject to the tariff imposed to eliminate threats to national security…” read an excerpt from the White House order.
- India will see tariffs slashed to 18% for textiles, apparel, leather, footwear, plastics, chemicals, home décor and machinery.
- The interim agreement also eliminates or reduces tariffs on Indian aircraft parts, generic pharma, gems/diamonds (post-probe).
- It outlines a preferential quota for Indian auto parts.
What are the concessions made for America?
“India will eliminate or reduce tariffs on all U.S. industrial goods and a wide range of U.S. food and agricultural products, including dried distillers’ grains (DDGs), red sorghum for animal feed, tree nuts, fresh and processed fruit, soybean oil, wine and spirits, and additional products,” the trade deal statement explains.
- India will eliminate or reduce tariffs on all US industrial goods, food and agricultural products
- Removal of non-tariff barriers on US medical devices, Information and Communication Technology goods and agri products.
- India to purchase purchase $500 billion of US energy products, aircraft and aircraft parts, precious metals, technology products, and coking coal over the next 5 years.