US Removes Additional 25% Duty on India After Interim Trade Agreement
India–US Interim Trade Agreement Framework Finalised, Major Tariff Cuts to Boost Exports and Jobs: India and the United States have released the framework of an interim trade agreement, marking a significant step forward in bilateral economic relations. Both countries issued a joint statement confirming that the framework has been finalised and will be implemented immediately, while work continues toward a comprehensive bilateral trade agreement in the future.
Under the framework, the United States has sharply reduced tariffs on Indian goods from 50% to 18%, a move expected to significantly boost Indian exports, employment, and the MSME sector. Key sectors such as generic medicines, diamonds and jewellery, and aircraft parts will enjoy zero tariffs, while industries including textiles, readymade garments, leather, footwear, plastics, rubber, chemicals, handicrafts, home décor, and certain machinery are expected to see expanded market access.
India, meanwhile, has fully protected its sensitive agricultural and dairy sectors. Union Commerce and Industry Minister Piyush Goyal clarified that products such as wheat, rice, maize, soy, milk, cheese, poultry, ethanol, tobacco, select vegetables, and meat products remain shielded from tariff concessions. The government stated that the agreement prioritises domestic interests and will not adversely affect farmers or rural livelihoods.
The framework also includes tariff reductions on selected U.S. agricultural and industrial goods, such as nuts, fruits, soybean oil, alcohol, and animal feed. Cooperation will expand in areas such as data-center GPUs, advanced technology equipment, digital trade, and supply-chain resilience, helping both countries reduce dependence on third-country policies.
End of Additional Tariff on India
The United States also announced the removal of the 25% additional tariff on Indian goods, effective February 7, 2026. The additional duty was imposed in August last year over India’s purchase of Russian oil. According to the US administration, India has now committed to ending direct and indirect purchases of Russian oil, increasing imports of American energy products, and enhancing defence cooperation over the next decade. The US has indicated that the additional tariff could be reimposed if India resumes Russian oil purchases.
Long-Term Commitments
As part of the broader economic partnership, India is expected to purchase energy, aircraft, metals, coal, and technology products worth nearly $500 billion from the US over the next five years. The White House stated that the framework reflects a renewed commitment by both nations to create a balanced, mutually beneficial, and resilient trade system, building on trade talks initiated by President Donald Trump and Prime Minister Narendra Modi.
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