India’s exports worth about US $44 billion to the US will enter the American market at zero reciprocal tariffs under the first phase of the bilateral trade agreement, which is expected to be signed by mid-March, Commerce and Industry Minister Piyush Goyal said on Saturday.
The two countries have announced that they have reached a framework for an interim trade agreement under which both sides will reduce import duties on a number of goods to boost two-way trade.
While the US will reduce tariffs on Indian goods to 18 per cent from the present 50 per cent, India will eliminate or cut down import duties on all US industrial goods and a wide range of American food and agricultural products, including dried distillers’ grains, red sorghum for animal feed, tree nuts, fresh and processed fruit, soybean oil, wine and spirits. “About US $44 billion worth of Indian exports will go to zero reciprocal duty (to the US),” Goyal told reporters.
While Indian goods worth about US $30 billion will continue to attract an 18 per cent tariff (which includes goods from labour-intensive sectors), there will be no change in duties on goods worth US $12 billion, including steel, copper and certain auto parts.
These tariffs on steel, aluminium, copper and auto parts apply to all countries equally, so they do not impact only India’s competitiveness. These products face a 50 per cent tariff in the US. In 2024-25, the bilateral trade in goods touched US $186 billion (US $86.5 billion exports and US $45.3 billion imports).
With America, India had a trade surplus (difference between imports and exports) of US $41 billion in 2024-25. It was US $35.32 billion in 2023-24 and US $27.7 billion in 2022-23. The reduction of tariffs will immediately boost exports of labour-intensive sectors like textiles, apparel, leather and footwear, Goyal said.
“The interim agreement which has been finalised will soon be converted into the first tranche of our potential bilateral trade agreement (BTA),” he said, adding that the pact will help achieve US $500 billion bilateral trade target by 2030.
The two countries, he said, have come to a “very fair, equitable, and balanced” agreement which will slash US reciprocal tariffs on Indian goods to 18 per cent. Through an executive order, the 25 per cent reciprocal tariffs will be reduced to 18 per cent by the US. The order may come soon.
“Additionally, zero per cent tariffs will be given on several Indian products like generic pharma, aircraft components, auto parts, etc,” he added.
Massive potential will be opened up for Indian exports in the world's largest economy, the US $30 trillion market, Goyal said. The pact would provide opportunities for MSMEs, farmers, fishermen, youth, women and the talented people of India, he added.
It would also help farmers and fishermen to get better price for their produce in the US market and “going forward, there will be a huge growth in sectors like textile and apparel, gem and jewellery, machinery parts, toys, leather and footwear, home decor, smart phones and several areas in agriculture”.
He said India has safeguarded sensitive sectors and has not extended any duty concessions in those segments. These include agricultural goods, meat, poultry, all dairy products, GM (genetically modified) food products, soy meal, maize, cereals, millets like jowar, bajra, ragi, kodo, amaranth, fruits like banana, strawberries, cherries and citrus fruits.
Other products are green peas, kabuli chana, moong, oilseeds, certain animal feeds, groundnuts, honey, malt and its extracts, non-alcoholic beverages, flour and meals, starch, essential oils, ethanol for fuel, and tobacco. “It's truly an agreement that will give huge advantages both to farmers, fishermen and industry in India,” said Goyal.
The agreement will open up significant opportunities for India in emerging areas like data centres, artificial intelligence and quantum computing as the country will gain access to equipment, high-quality chips, ICT goods, machinery, pharmaceuticals and medical devices. For these products, the US is “very well known”, he said.
Also read: Quota-based duty concessions on US apples: Goyal
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