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India and the United States have finalized an Interim Trade Agreement after weeks of discussions. The deal aims to strengthen bilateral trade, improve market access, and boost economic cooperation between the two countries.
Big Tariff Cut by the US
As part of the agreement, the United States will reduce tariffs on Indian goods from 50% to 18%. This step will benefit Indian exporters and open doors to the USD 30 trillion US market.
Major Benefits for Indian Exporters
The deal will especially help:
- MSMEs (Micro, Small, and Medium Enterprises)
- Farmers
- Fishermen
Higher exports are expected to create millions of new jobs, especially for women and young people in India.
Key Sectors That Will Gain
Several important industries in India will benefit from better market access in the US, including:
- Textiles and apparel
- Leather and footwear
- Plastic and rubber products
- Organic chemicals
- Home décor and handicrafts
- Selected machinery
Zero Duty on Select Products
Tariffs will be completely removed on products such as:
- Generic medicines
- Gems and jewellery
- Diamonds
- Aircraft parts
This will give a strong boost to Indian manufacturing and exports.
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Special Trade Concessions for India
The US has agreed to:
- Provide relief under Section 232 for aircraft parts
- Offer tariff-rate quotas for auto components
- Hold positive discussions on generic pharmaceutical exports
Also Read: US Cuts Tariffs on India to 18%, Boosting India-US Trade Relations
Protection of India’s Agriculture Sector
India has protected its sensitive agricultural and dairy products. Items like maize, wheat, rice, soybeans, poultry, milk, cheese, ethanol, tobacco, certain vegetables, and meat will remain fully safeguarded.
Better Market Access for US Products in India
India will reduce or remove tariffs on several US products, including:
- Dried distillers grains
- Animal feed products
- Tree nuts
- Fresh and processed fruits
- Soybean oil
- Wine and spirits
Rules, Standards, and Digital Trade
Both countries will:
- Set Rules of Origin to ensure fair use of the agreement
- Address non-tariff trade barriers
- Improve standards and conformity assessments
- Remove obstacles affecting digital trade
India will also ease import rules for US medical devices and ICT products.
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Stronger Supply Chains and Technology Cooperation
India and the US will work together to:
- Strengthen supply chain resilience
- Promote innovation
- Expand trade in technology products like GPUs and data-center equipment
India’s Future Purchases from the US
India plans to buy USD 500 billion worth of US goods over the next five years, including:
- Energy products
- Aircraft and aircraft parts
- Critical minerals
- Technology products
- Coking coal
What Comes Next
Both countries will implement this framework immediately and continue talks to finalize a full bilateral trade agreement that benefits both sides.
Also Read: India-US Trade Deal Done: Trump Cuts Tariffs After PM Modi Call
