Syllabus: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.
Context and Nature of the Framework
- India and the U.S. unveiled an interim trade deal framework to deepen economic engagement.
- Joint statement outlines tariff reductions, market access, and trade facilitation commitments.
- Agreement reflects growing trust and dynamism in bilateral partnership.
Tariff Reduction Commitments
- India will remove or reduce tariffs on all U.S. industrial goods imports.
- Tariffs will also fall on a wide range of agricultural products.
- The U.S. will cut tariffs on Indian imports to 18% from 50%.
- Reduction will occur through amendment of the executive order.
- Earlier additional 25% tariff linked to Russian oil imports was removed.
Phased Implementation Process
- India’s tariff cuts will follow formal signing of the interim agreement.
- Agreement signing is expected around mid-March.
- U.S. reciprocal tariff reduction order expected shortly thereafter.
Market Access and Trade Expansion
- Preferential market access will be provided to sectors of mutual interest.
- Rules of origin will ensure benefits accrue mainly to both nations.
- U.S. tariff cuts will cover textiles, footwear, chemicals, décor, machinery.
- Future tariff removals include pharmaceuticals, gems, aircraft components.
- Metals such as aluminium, steel, and copper will also see tariff removal.
India’s Import and Purchase Commitments
- India intends to purchase $500 billion of U.S. goods over five years.
- Imports include energy products, aircraft, precious metals, technology goods.
- Coking coal purchases are also part of the commitment.
Protection of Sensitive Sectors
- India will fully protect sensitive agriculture and dairy sectors.
- Protected items include maize, wheat, rice, poultry, milk, and tobacco.
- Policy aims to safeguard farmers’ interests and rural livelihoods.
Addressing Non-Tariff Barriers
- Both sides agreed to resolve non-tariff trade barriers.
- India will address barriers on U.S. medical devices and ICT goods.
- Agricultural trade barriers will also be reviewed.
Technology, Supply Chains and Digital Trade
- Cooperation will expand in technology trade, including GPUs and data centres.
- Both nations will strengthen supply chain resilience and innovation.
- Digital trade rules will be negotiated under the future Bilateral Trade Agreement.