India and the United States on February 6-7, 2026 announced a landmark interim trade framework aimed at resetting economic ties, cutting longstanding tariff barriers and setting the stage for a broader Bilateral Trade Agreement (BTA) anticipated by March 2026.
Under the pact, Washington agreed to slash its reciprocal tariffs on Indian goods to 18 per cent from around 50 per cent, while New Delhi committed to eliminate or reduce duties on a wide range of US industrial, food and agricultural products. The deal also includes Section 232 tariff relief for Indian exports such as aircraft parts, a tariff-rate quota for automotive components, and negotiated outcomes for generic pharmaceuticals.
Both sides pledged expanded cooperation on technology, digital trade and resilient supply chains and outlined India’s intent to import up to $500 billion of US goods over five years. The agreement has been hailed by governments as a catalyst for jobs and exports but has also drawn criticism from opposition parties and farmer groups concerned about its impact on domestic agriculture.
Tariffs, Concessions, Market Access and Strategic Cooperation
At the core of the interim framework are tariff adjustments designed to boost bilateral trade. The United States, which had imposed steep tariffs on Indian goods under successive national-security and trade-deficit pretexts, agreed to reduce the reciprocal tariff rate to 18 per cent across a broad range of Indian exports from textiles and apparel to leather, plastics, organic chemicals and artisanal products.
In many cases, tariffs are poised to reach zero once the interim agreement is fully implemented, particularly on generic pharmaceuticals, gems and diamonds, and aircraft parts, significantly enhancing Indian exporters’ competitiveness in the US market.
On the Indian side, the government committed to eliminating or lowering duties on all US industrial goods and a wide variety of agricultural and food products, including dried distillers’ grains (DDGs), red sorghum for animal feed, tree nuts, fresh and processed fruits, soybean oil, wine and spirits.
India also agreed to address long-standing non-tariff barriers affecting US exports, including medical devices, ICT goods and food and agriculture products by reviewing standards and testing norms within six months.
A particularly noteworthy element is the handling of Section 232 “national-security” tariffs a controversial provision of US trade law. India secured concessions on certain tariffs imposed on aircraft and aircraft parts and autoparts, as well as negotiated outcomes for generic pharmaceuticals and ingredients that had previously fallen under these tariffs. These moves provide some relief from punitive duties that had hindered key sectors.
Both governments also highlighted expanded technology cooperation, including trade in Graphics Processing Units (GPUs) and data-centre goods, as well as cooperation on export controls and digital trade standards signalling that the pact reaches beyond conventional goods into strategic sectors.
Political and Economic Reactions
Governments on both sides framed the agreement as a win for economic growth and geopolitical partnership. India’s Commerce and Industry Minister, Piyush Goyal, described the framework as a catalyst to “open a $30 trillion market for Indian exporters,” benefiting MSMEs, farmers, fishermen, women and youth by boosting exports and employment opportunities. Prime Minister Narendra Modi tweeted that the deal “reflects the growing depth, trust and dynamism of our partnership,” and strengthens initiatives like Make in India.
From the US side, officials including Ambassador Greer and Agriculture Secretary Brooke Rollins noted that the deal expands market access for American producers and that India has “significant potential” to import more US agricultural products that were previously restricted by high tariffs.
However, the framework has not been free of criticism and controversy. India’s opposition parties including the Congress have demanded full transparency of the agreement’s text and argued that tariff concessions tilt in favour of the US and could undermine domestic industries.
Farmer organisations and regional leaders have warned that reduced duties on US agricultural and food products could flood Indian markets with heavily subsidised imports, threatening the livelihoods of millions of Indian farmers who lack comparable government support. Protests and calls for democratic scrutiny, including placing the full agreement before Parliament, have gained traction in states like Punjab and Haryana.
Trade analysts also note that while sensitive staples like wheat, rice, dairy products and poultry have been safeguarded with no duty concessions, tariff reductions on products such as soybean oil and tree nuts could still put pressure on certain segments of India’s agrarian economy.
Furthermore, one of the diplomatic trade-offs linked to the deal is India’s halt on Russian oil purchases, a condition referenced by US officials as part of the broader negotiation context, although New Delhi has emphasised it acts independently in its energy diversification strategy.
The Logical Indian’s Perspective
The interim India-US trade framework represents a substantial reset in economic relations between two of the world’s largest democracies. On one hand, the tariff cuts and market access provisions could boost exports, create jobs and attract investment, particularly for MSMEs and competitive sectors like textiles, pharmaceuticals and technology. Cooperation on digital trade and supply-chain resilience reflects the evolving nature of global commerce.
Yet trade agreements do not operate in a vacuum they interact with social realities, including agrarian livelihoods, small-scale industry and regional economies that are less equipped to absorb sudden exposure to imported competition. Safeguarding sensitive sectors, as India has attempted here, is crucial; but meaningful policy safeguards and transition support for farmers and vulnerable producers remain essential to ensure that economic opening does not translate into social dislocation.
