India-US Trade Deal Cuts Tariffs on Textiles, Drugs, Aircraft Parts

India and the United States have finally signed an interim tariff agreement aimed at reducing trade barriers and strengthening bilateral economic cooperation.

"The framework was agreed upon in ongoing negotiations to expand two-way trade and to lay the groundwork for a comprehensive Bilateral Trade Agreement (BTA)," said Rajeev Juneja, President, PHDCCI.

Under the terms of the interim agreement, the US will apply a reciprocal tariff rate of 18 per cent on Indian-origin goods, which include textiles, apparel, leather and footwear, plastics and rubber, organic chemicals, home decor, artisanal products, and certain machinery.

Tariffs on specific Indian export categories - notably generic pharmaceuticals, gems and diamonds, and aircraft parts - are scheduled for removal, contingent on successful implementation and finalisation of the interim agreement, said Juneja.

The United States will also lift certain national security-related tariffs previously applied on Indian aircraft and aircraft parts under steel, aluminum, and copper measures.

Based on the announced tariff adjustments, several Indian sectors are expected to see positive trade effects.

Reduced tariff barriers will improve access to the US market for Indian generic drug manufacturers. Gems and Jewellery sector is expected to support exports from India's cutting and polishing industry, improving margins and export volumes.

Removal of tariffs on aircraft and aircraft parts benefits India's emerging aerospace manufacturing, maintenance, repair and overhaul (MRO), and component supply ecosystem.

"Application of a lower reciprocal tariff rate enhances competitiveness for Indian textile and garment exporters in the US market, particularly in labour-intensive segments," said PHDCCI.

Reduced trade friction supports exports of industrial machinery, auto components, and fabricated metal products, and organic chemicals, plastics, and rubber products benefit from improved price competitiveness and expanded market access.

Artisanal products, home decor, and lifestyle goods are expected to gain from improved tariff treatment and stable access to the US consumer market.

"This interim tariff agreement marks a significant development in U.S.-India trade relations, potentially expanding market access for exporters in both countries and providing a stable and comprehensive trade framework said," said Dr Ranjeet Mehta, CEO and Secretary General, PHDCCI.

- IANS