India and the United States have established a temporary trade agreement. The two nations issued a joint declaration to announce their new development. The United States will decrease tariffs on Indian products from 50 percent to 18 percent according to the agreement. The statement also mentioned that both parties developed a framework which will establish future bilateral trade agreements that will benefit both nations.
Government Response and Expected Benefits
India selected Union Minister of Commerce and Industry Piyush Goyal to lead the negotiation process. He described the interim agreement as a historic step. The deal provides Indian exporters with access to a market which has a total value of $30 trillion according to him.
According to the minister the agreement will provide assistance to both MSMEs and farmers as well as fishermen. Higher export volumes will create hundreds of thousands of new employment positions according to him especially for women and young people. The sectors which he specified will receive advantages include:
- Textiles
- Leather and footwear
- Plastics and rubber products
- Organic chemicals
- Home furnishings and handicrafts
- Selected machinery
Trade Commitments by Both Countries
- The United States declared that India will stop its Russian oil purchases according to its agreement with the United States. The statement confirmed that India will acquire substantial amounts of fuel and gas through imports from the United States. India has pledged to buy goods worth $500 billion from the United States according to its commitment.
- India will decrease or eliminate tariffs on multiple American products through its agreement. The products affected by this include industrial goods and fruits and soybean oil and all agricultural and food products which include wine and spirits. The United States will eliminate tariffs on specific Indian exports which include generic medicines and gems and diamonds and aircraft components as part of the agreement.
Removal of Additional Tariffs
- Last year, the United States imposed an additional 25 percent tariff on Indian goods due to India’s oil imports from Russia. Following the new agreement, the US has confirmed that these extra tariffs will be removed. The White House stated that President Trump has signed an executive order for this change, which will take effect from February 7.
- Both countries also reaffirmed their commitment to expanding defense cooperation under a long-term framework covering the next ten years.
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