India-US Trade Framework to Make Rs 4 Lakh Crore Worth of Exports Tax-Free
Zero Tariff for Key Indian Products in US Under New Trade: Trade between India and the United States has become the center of national discussion after the two countries announced an interim trade framework, which is being described as the “father of all deals.” The framework was released on Saturday, accompanied by joint statements from both governments. While the agreement is still at an initial stage, it has already generated strong interest across sectors due to its wide-ranging benefits.
The most significant highlight of the framework is the government’s assurance that goods worth $44 billion (around Rs 4 lakh crore) exported from India to the US will be completely tax-free. This move is expected to provide a major boost to Indian exporters and strengthen bilateral trade ties.
Rs 4 Lakh Crore Worth of Goods to Be Tax-Free
According to government sources, products such as gemstones, diamonds, and aircraft parts will dominate the list of exports entering the US at zero duty. Of the total $44 billion tax-free exports, $30 billion worth of goods were already enjoying zero tariffs, while an additional $14 billion worth of products have now been added under the new framework.
This zero-tariff figure forms part of India’s total exports of $86.51 billion to the US in FY2025. Categories such as electronics and generic medicines were already duty-free earlier, and the new framework significantly expands this list.
Key Sectors to Benefit
Addressing the media, Union Commerce and Industry Minister Piyush Goyal said several high-value sectors will benefit from zero tariffs. He confirmed that gems and diamonds, pharmaceutical products, and smartphones exported from India to the US will continue to enjoy zero-duty access.
Apart from these, the zero-duty list also includes machinery parts, generic medicines, some auto parts, platinum, watches, essential oils, home décor items like chandelier and lamp parts, along with select paper, plastic, wood products, and inorganic chemicals.
Agricultural Exports Get Relief
Goyal also announced major relief for agricultural exports, which earlier faced tariffs of up to 50 percent. Products now eligible for zero tariffs include spices, tea, coffee, copra, coconut and coconut oil, vegetable oils and wax, areca nuts, Brazil nuts, cashews, chestnuts, and fruits and vegetables such as avocados, bananas, guavas, mangoes, kiwis, papayas, mushrooms, as well as barley and some processed foods.
He clarified that sensitive agricultural products have been excluded to protect Indian farmers. No genetically modified products will be allowed, and meat, dairy, soybeans, wheat, rice, sugar, pulses, oilseeds, ethanol, and tobacco are not part of the agreement.
Trade and Tariff Structure
Trade data shows that India imported $45.62 billion worth of goods from the US in FY2025, while exports stood at $86.51 billion. Under the new framework, the US has agreed to reduce tariffs on Indian goods from 50 percent to 18 percent, effective August 2025.
US President Donald Trump stated that India will purchase over $500 billion worth of American energy, technology, agricultural products, and coal in the coming years. Reciprocal tariffs of 18 percent will apply to sectors such as textiles, apparel, leather, footwear, plastics, rubber, chemicals, home furnishings, handicrafts, and certain machinery.
Industry Welcomes the Move
Reacting to the announcement, Kirit Bhansali, Chairman of the Gems and Jewelry Export Promotion Council, welcomed the framework and said it would provide much-needed relief to the sector, which has been under pressure due to high tariffs. He added that the US remains the most important market for Indian gems and jewellery exports.
The interim framework is expected to be finalized into a formal trade agreement soon, potentially reshaping India-US trade relations for years to come.
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