Key points of the India-US trade agreement: Both countries have issued a joint statement, but what will change for ordinary citizens?

Posted on 7th Feb 2026 by rohit kumar

The framework for the trade agreement between India and the United States has been released. The two countries have finalized the framework for an interim trade agreement and issued a joint statement, which is seen as potentially giving a new direction to the economic relations between the two countries. In this interim trade agreement framework, the US has made significant tariff reductions on Indian products, which are expected to boost exports, employment, and the MSME sector. On the other hand, India has maintained protection for sensitive sectors such as agriculture and dairy.

 

 

The statement released indicates that the objective of this agreement is to increase trade between the two countries, create jobs, and strengthen the economies of both nations. Under this agreement, the US has reduced the tariff on Indian goods from 50% to 18%. This will make it cheaper and easier for Indian companies to sell their goods in the US.

 

 

Key Points of the India-US Interim Trade Agreement:

The US has reduced tariffs on Indian goods from 50% to 18%, giving Indian exporters access to a larger market.

The US market, worth approximately $30 trillion, is now open to MSMEs, farmers, and fishermen.

Increased exports will create millions of new jobs, especially for women and youth.

Tariffs on generic medicines, diamonds and jewelry, and aircraft parts will be 0%.

Opportunities will increase in textiles, ready-made garments, leather, footwear, plastics, rubber, organic chemicals, home decor, handicrafts, and certain machinery.

There is no agreement on wheat, rice, maize, milk, cheese, poultry, and other sensitive products.

Tariffs will be reduced on US agricultural and industrial goods such as nuts, fruits, soybean oil, wine, and animal feed.

Cooperation will increase in GPUs in data centers, other technological goods, and digital trade.

Both countries will work together to strengthen supply chains and ensure protection against policies of third countries.

In the next 5 years, India will purchase $500 billion worth of energy, aircraft, metals, technology, and coal from the US. The framework will be implemented immediately, and work will continue towards finalizing a comprehensive bilateral trade agreement in the future.

 

 

 

What is the framework of the interim trade agreement?

A joint statement issued by both countries stated that India and the US will immediately implement the agreed framework for an interim agreement and work towards finalizing it. A statement from the White House said that this framework reiterates both countries' commitment to comprehensive bilateral trade negotiations. This initiative is the next phase of the trade talks initiated by US President Trump and Prime Minister Narendra Modi. The agreement aims to create a balanced and mutually beneficial trade mechanism.

 

 

No agreement on the agriculture and dairy sectors. What did Goyal say?

In this agreement, India has protected its agriculture and dairy sectors. Piyush Goyal clearly stated that India has completely safeguarded its sensitive agricultural and dairy products in the agreement. Maize, wheat, rice, soy, poultry, milk, cheese, ethanol, tobacco, some vegetables, and meat products have been protected. The government says that this will not have any negative impact on farmers and rural livelihoods. Protecting domestic interests has been prioritized alongside opening up trade.

 

 

Which sectors will benefit significantly?

It is noteworthy that several industries will directly benefit from this agreement. These include textiles and ready-made garments, leather and footwear, plastics and rubber products, chemicals, home decor and handicrafts, and the machinery sector. In addition, tariffs on generic medicines, diamonds and jewelry, and aircraft parts will be reduced to zero.