India-US Trade Deal: What Could Soon Get Cheaper in India

New Delhi: India and the United States have released a framework for an interim trade agreement that is expected to lower tariffs, expand market access and strengthen economic cooperation between the two countries. The framework was seen as a stepping stone toward a comprehensive bilateral trade agreement. 

The interim deal lays out reciprocal commitments on tariffs, regulatory cooperation and strategic trade priorities. One of the most immediate impacts for Indian consumers and industries will be the reduction in prices of several American industrial and agricultural products as India cuts or eliminates import duties.

What could get cheaper in India

Under the interim framework, India will eliminate or reduce import duties on a wide range of US-origin goods. 

Products likely to become cheaper include:

1. Dried distillers’ grains used in animal feed and ethanol production
2. Red sorghum
3. Tree nuts
4. Fresh and processed fruits from the US
5. Soybean oil
6. Wine and spirits

These reductions are expected to benefit Indian manufacturers, food processors, hospitality businesses and the aviation sector by lowering input and procurement costs.

What gets cheaper for Indian exporters in US

In return for India’s tariff concessions, the United States has agreed to reduce reciprocal tariffs on Indian goods to 18per cent,, down from levels that had earlier risen to nearly 50per cent.  This reset is expected to restore competitiveness for Indian exporters in the world’s largest consumer market.

Sectors likely to benefit include:

1. Textiles and apparel
2. Leather and footwear
3. Plastic and rubber products
4. Organic chemicals
5. Home décor and handicraft items
6. Artisanal products
7. Certain machinery sectors
8. Generic pharmaceuticals, with zero tariffs on certain categories
9. Gems and diamonds
10. Aircraft parts benefiting from exemptions under Section 232

Commerce and Industry Minister Piyush Goyal said the agreement would open a massive market for Indian exporters, particularly MSMEs, farmers and fishermen, and help generate lakhs of new jobs, especially for women and youth.

In an 'X' post, Goyal stated that an agreement would significantly boost exports and create lakhs of new jobs, especially for women and youth.

"Under the decisive leadership of PM Narendra Modi, India has reached a framework for an interim agreement with the US. This will open a $30 trillion market for Indian exporters, especially MSMEs, farmers and fishermen. The increase in exports will create lakhs of new job opportunities for our women and youth," the 'X' post said.

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Trump announces tariff cut, calls Modi a ‘close friend’

Trump revealed the decision through a post on Truth Social, confirming that the United States would reduce reciprocal tariffs on Indian goods from 25 per cent to 18 per cent.

“It was an honour to speak with Prime Minister Modi of India this morning. He is one of my greatest friends and a powerful and respected leader of his country.”

Trump said discussions covered trade and global issues, including the Russia-Ukraine war, adding that India would reduce tariffs and non-tariff barriers against the US.

“Out of friendship and respect for Prime Minister Modi and, as per his request, effective immediately, 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%.”

He further claimed that India had committed to increasing purchases of American goods.

“The Prime Minister also committed to ‘BUY AMERICAN’ at a much higher level, in addition to over $500 billion dollars of US energy, technology, agricultural, coal and many other products.”

PM Modi welcomes tariff relief

Responding to Trump’s announcement, Prime Minister Narendra Modi welcomed the reduced tariffs, calling it a win for Indian producers and exporters.

“Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18%.”

He added that cooperation between the two democracies would unlock new economic opportunities.

“When two large economies and the world’s largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation.”

Modi also praised Trump’s leadership, linking stronger bilateral ties to global peace and stability.