The United States and India moved closer to a trade pact yesterday, releasing an interim framework that would lower tariffs, reshape energy ties and deepen economic co-operation as both countries seek to realign global supply chains.
The framework reaffirms a commitment to negotiations towards a broader bilateral trade agreement, the two governments said in a joint statement, while noting that further negotiations were needed to complete the pact.
Separately, US President Donald Trump in an executive order removed the additional 25 per cent tariff imposed on Indian goods for Russian oil purchases as New Delhi “committed to stop directly or indirectly importing” Russian oil.
However, US officials will monitor and recommend reinstating the tariff if India resumes oil procurement from Russia, the order said, as Washington maintains pressure on India to restrict energy ties with Moscow.
The India-US joint statement did not mention India’s Russian oil purchases or a formal pledge from India to confirm the move.
Trump announced a deal with India on Monday to cut US tariffs on Indian goods to 18pc from 50pc in exchange for India halting purchases of Russian oil and lowering trade barriers.
Half of the 50pc rate had been imposed separately by Trump as punishment for India’s purchases of Russian oil, which he said were fuelling Moscow’s war effort in Ukraine. Trump signed an executive order yesterday rescinding that 25pc portion after India agreed this week to shift its oil buying to the US and Venezuela.
However, the statement indicated that New Delhi resisted Washington’s push to broadly open its agricultural market.
Trade Minister Piyush Goyal said the agreement safeguards farmers’ interests and rural livelihoods by “completely protecting sensitive agricultural and dairy products”.
Imports of genetically modified agricultural products would not be directly allowed as there was no such provision in the pact, while fruits like apples would be allowed under a tariff quota, he said at a Press briefing.
On Russian oil, Goyal declined to comment, saying the foreign ministry would respond.
India’s opposition Congress party, however, said the trade deal was concluded on US terms and hurt farmers and traders, calling the pact a “complete surrender” of national interests.
The joint statement provides additional details compared with initial outlines of the trade deal revealed by Trump on Monday.
It confirms that India will purchase $500 billion in US goods over a five-year period, including oil, gas, coking coal, aircraft and aircraft parts, precious metals, and technology products. The last category includes graphics processing units, typically used for AI applications, and other goods used in data centres.
It said India would eliminate or reduce tariffs on all US industrial goods and a wide range of US food and agricultural products, including dried distillers’ grains and red sorghum for animal feed, tree nuts, fresh and processed fruit, soya bean oil, wine and spirits.
But the deal will apply an 18pc tariff rate on most imports to the US from India, including textiles and apparel, leather and footwear, plastic and rubber, organic chemicals, home decor, artisanal products and certain machinery.
India will get the same tariff relief granted to other allied countries that have signed trade deals with the US on certain aircraft and aircraft parts, and will receive a quota for auto parts imports that will be subject to a lower tariff rate, according to the statement.
Depending on the results of the Trump administration’s tariff investigation into pharmaceuticals and their ingredients, “India will receive negotiated outcomes with respect to generic pharmaceuticals and ingredients,” the statement said.
Goyal hailed the framework agreement as opening a market worth $30 trillion – the US annual GDP – to Indian exporters, especially farmers, fishermen, and micro and small-to-medium enterprises.
Goyal had said on Thursday that Washington and New Delhi aimed to sign a formal trade agreement in March, after which India’s tariff cuts on US exports would go into effect.
India also agreed to address longstanding non-tariff barriers on imports of agricultural products, medical devices and communications gear, with negotiations to be completed within six months on an agreement to accept US or international safety and licensing standards for product imports.
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