India and U.S. Announce Framework for Interim Trade Agreement

On February 7, 2026, India and the United States announced a new framework for an interim trade agreement. This agreement is designed to improve trade relations between the two countries by reducing certain tariffs and addressing trade barriers. The key highlights of the agreement include a reduction in U.S. tariffs on Indian goods from 25 percent to 18 percent. This change will make it easier and less expensive for India to export goods to the U.S. It also aims to eliminate or lower tariffs on U.S. industrial products, as well as many U.S. food and agricultural items. The Chemicals and Allied Products Export Promotion Council, known as CAPEXIL, welcomed the announcement. They noted that lowering tariffs would benefit sectors like perfume bottle exports to the U.S. and help Indian exporters receive a better market share. Under the new trade framework, the U.S. will apply an 18 percent reciprocal tariff on goods originating from India, including textiles, apparel, leather, footwear, plastic, rubber, organic chemicals, home décor, artisanal products, and some types of machinery. This means that these types of goods will face the same tariff rate when exported from India to the U.S. India has also committed to making large purchases from the U.S. over the next five years. The country plans to buy goods worth about 500 billion U.S. dollars. These includes energy products, aircraft and aircraft parts, precious metals, technology items, and coking coal. This large purchase is expected to boost trade and economic cooperation between the two nations. The agreement also addresses non-tariff barriers, which are regulations that can make trade difficult even when tariffs are low or removed. These barriers include restrictions on U.S. medical devices and procedures for obtaining import licenses for U.S. Information and Communication Technology (ICT) goods. Addressing these issues is important for making trade smoother and more open. The signing of the interim trade agreement is expected to happen by mid-March 2026. Once signed, the duty concessions will go into effect, making the trading process easier and benefiting companies and consumers in both countries. As of February 11, 2026, there has been no official confirmation about how the agreement will impact specific export figures for sectors like those represented by CAPEXIL. It remains to be seen how trade will change once the agreement is fully implemented. This trade framework represents a step forward in the economic relationship between India and the U.S. It aims to boost exports and imports, remove trade barriers, and create more opportunities for businesses in both countries. The agreement signals a continued effort to strengthen economic ties and address long-standing trade issues through cooperation and negotiation.