The steep cuts in tariff on Indian exports to the US, agreed on as part of the bilateral trade deal, will take effect ‘in the next 4-5 days’ on the signing of the joint statement between the two countries, Commerce and Industry Minister Piyush Goyal said Thursday. India will lower its tariffs for American goods after mid-March, he added.
“On the basis of that joint statement, the first phase of this partnership will begin between the two of us (the US and India),” the minister said. Immediately after the statement, the additional tariffs on Indian exports to the US will be brought down to 18% from 50% through an Executive Order of US President Donald Trump. The US had imposed 50% tariffs – 25% reciprocal and 25% for buying Russian oil – through an order by the President.
Official agreement expected by mid-March
Along with the joint statement a formal agreement is being drafted, which may take a month or a month and a half. It is estimated that the formal agreement will be signed by mid-March and is an essential milestone for India to start bringing down duties on imports from the US. “That legal agreement will give us the authority to reduce our tariffs,” commerce secretary Rajesh Agrawal said. The US tariffs are executive tariffs and India duties are most favoured nation (MFN) tariffs.
Goyal clarified that as part of the deal announced by Trump late Monday, India has not committed investments in the US. The clarification came after White House spokesperson’s remarks that India will be investing $500 billion in the US as part of the trade deal. The comment may have been due to some confusion as under the deal India has only agreed to purchase $500 billion worth of products from the US.
These purchases would be over the next five years, Goyal said. Trump, while announcing the deal, had said that India would be buying US energy, technology, agricultural, coal and many other products.
“With the fast-paced growth at which India is growing, we will need large volumes of energy, large numbers of data centre equipment, information communication technology products. We can clearly see before our eyes the potential that we can procure from the US over the next five years,” Goyal said.
“Our aircraft demand alone, orders placed on Boeing and yet to be placed but ready, are nearly $70-80 billion. If you add the engines and other spare parts, it will probably cost $100 billion,” he added.
Minister pitches data centre-manufacturing link
Data centres have just been given huge concessions in the Budget. “Now imagine if we get $100-150 billion dollars of investments in data centres, we will obviously need equipment for those data centres. So I think the time is right for India to boldly go forward to achieve and to mix up the two,” the minister said.
“All the things that we are committed to buy are part of this deal with the United States. Our current purchases from the globe are $300 billion plus. Next five years these purchases are going to be $2 trillion. If we are able to buy $500 billion from the US, it will only add to our diversification and resilience in our supply chain,” Agrawal said.
As part of an agreement in February 2025 to negotiate the Bilateral Trade Agreement (BTA), India and the US had agreed to take the bilateral trade to $500 billion by 2030. This will require much higher goods and services flows between the two sides. In 2024, India-US goods and services trade stood at $212.3 billion