India and United States Announce Trade Agreement Framework

India and the United States have announced a new trade agreement framework. This agreement aims to make trade easier and fairer for both countries. It also looks to improve cooperation in many areas of business and technology. The agreement was announced on February 6, 2026. It is called an interim trade agreement, meaning it is a temporary step toward a bigger, more complete trade deal in the future. The main highlights of this agreement include changes to tariffs, which are taxes on imports and exports. Tariffs on Indian goods will decrease from 25% to 18%. But this reduction depends on India reducing its imports of Russian crude oil. In addition, India has agreed to reduce or eliminate tariffs on many U.S. goods. These include industrial products, some food and agricultural items like dried grains, sorghum, nuts, fruits, soybean oil, wine, and spirits. In response, the United States will apply a reciprocal tariff rate of 18% on goods imported from India. This includes items like textiles, apparel, leather, footwear, plastic and rubber products, chemicals, home décor, artisanal products, and certain machinery. This setup helps both countries understand and agree on fair trading rules. The agreement also covers digital trade. India has committed to eliminate digital services taxes and negotiate rules for online trade. These rules will address practices that might be unfair or burdensome and prevent the imposition of customs duties on electronic transmissions. This part of the deal aims to make digital trade easier, faster, and fairer for companies in both countries. Furthermore, India plans to buy over 500 billion dollars worth of U.S. goods over the next five years. These purchases include energy products, aircraft and aircraft parts, technology products, coking coal, and precious metals. This promise shows a strong intention to increase trade volume between the two nations. The agreement is also designed to improve economic security. Both countries will work together to strengthen supply chains, which are systems that provide goods and materials. They will take actions to address policies from third parties that may affect their trade. They will also cooperate on reviews of investments and export controls, to make sure trade remains fair and secure. India and the U.S. aim to expand market access further. They will start negotiations on a Bilateral Trade Agreement (BTA) to explore more opportunities for businesses in both countries. This is part of a larger goal to create a balanced and reciprocal trading relationship. This interim agreement is a step toward a broader U.S.-India Bilateral Trade Agreement that began discussions in February 2025. The bigger goal is to have more balanced trade, better supply chain security, and closer economic ties. As of now, there is no official confirmation on how this agreement will impact the electronic sector specifically. But the overall goal is to promote fair trade practices and economic growth for both countries. The new framework shows a shared commitment to working together to improve trade relations in the coming years. This agreement marks an important development in U.S.-India economic relations. It reflects both countries' efforts to reduce trade barriers and build a more cooperative and resilient trade relationship. It also indicates ongoing efforts to negotiate deeper economic ties through future agreements focused on more market access and investment opportunities.