The India-US trade agreement exempts Indian dairy and “sensitive” agricultural goods from its scope, provides zero-duty access on Indian goods worth more than $40 billion, and reduces customs duties on labour-intensive Indian goods such as some agricultural goods, including textiles, leather goods, marine products, chemicals and processed food, to 18% from day one, people aware of the development said on Tuesday.
Detailed discussion on the basic outline of the deal announced by the President donald trump On Monday, the people quoted above said the 25% punitive duty imposed on Indian goods for buying Russian oil would be removed in a few days. Additionally, the 25% reciprocal tariff imposed on about $30 billion worth of goods (labour-intensive goods) will be reduced to 18% once the agreement is formalized through a joint statement, he said, requesting anonymity. He was referring to bilateral trade data for the calendar year 2024.
“Indian exporters were struggling to survive in their biggest market against cheap labour-intensive products from competing countries like Bangladesh, Cambodia, Vietnam, Indonesia. ChinaMalaysia and Thailand due to huge duty difference. They paid around 19%-20% instead of charging 50% from Indian exporters. Now, after the deal, Indian exporters will get about 1-2 per cent duty benefit,” said one of them.
Import duties on competing countries in the US market are high. For example, Vietnam has 20%, Malaysia 19%, Bangladesh 20%, Cambodia 19% and Thailand 19%.
Union Minister of Commerce and Industry Piyush Goyal New Delhi said sensitive agriculture and dairy sectors have been protected in an agreement that will boost labour-intensive and export-oriented sectors. “This is truly a deal that every Indian can be proud of,” he said.
US Trade Representative Jamieson Greer said in an interview that India has agreed to reduce tariffs on US exports and that tariffs on India’s industrial goods will go from 13.5% to zero. “India is maintaining some protection on agricultural commodities,” he told CNBC in an interview.
This development came to light a day after the Prime Minister Narendra Modi The announcement that Indian goods will face lower US tariffs of 18% came after a phone conversation with Trump, who said the two sides had struck a trade deal under which New Delhi would reduce its tariffs to zero and buy more than $500 billion worth of US goods, including energy.
The announcement ended nearly 12 months of tense negotiations that had seen bilateral relations deteriorate.
India’s labour-intensive sectors were most affected by US tariffs, which were the highest (50%) among competitor countries. The people cited above said the sectors mainly include textiles and apparel, leather and footwear, marine products, chemicals, plastics, rubber, home furnishing, carpets, machinery, some agricultural commodities and processed agricultural products.
According to him, the governments of both sides are finalizing a joint statement, which will formalize the framework of the agreement. After this, both the parties will seal the deal after legal scrutiny. “Most of the provisions of the deal will come into effect after the joint statement. Some of them may have some specific timelines,” said a second person. He said the deal has already been negotiated in a structured manner, so it will be implemented expeditiously.
Indian government officials declined to comment on specific details of the deal ahead of a formal joint statement because there may be some last-minute adjustments. The joint statement will formalize the consensus reached after lengthy negotiations, he said, requesting anonymity.
Both Goyal and Greer separately indicated that the final language deal It had not been confirmed yet.
“We will soon issue a joint statement by both the countries with the details between the United States and India. And as soon as the agreement is finalized and the joint statement is finalized, the technical processes will be completed, complete information will be shared,” Goyal said in Delhi.
“But I can assure the people of India, I can assure 140 crore brothers and sisters, that this is a deal that will make every Indian proud, that will protect the interests of every Indian, and provide huge opportunities for all the people of India, and will protect in full respect the interests of sensitive sectors, our agriculture and our dairy sectors, our labour-intensive sectors, textiles, plastics, apparel, home furnishing, leather and footwear, gems and jewellery, organic This will open up huge opportunities for export sectors in chemicals, rubber, machinery, so many products, aircraft components,” he said.
Greer said trump administration Was working on finalizing the trade agreement.
“We’ll get the paperwork done, but we know the specifics, we know the details,” he said.
Earlier in the day, US Agriculture Secretary Brooke Rollins had said Washington will export more agricultural products to India as part of the agreement that will pump more cash into rural America.
“Thank you to US President Donald Trump for once again helping our American farmers. The new US-India agreement will export more US agricultural products to India’s vast market, raising prices and bringing cash to rural America. In 2024, the US agriculture trade deficit with India was $1.3 billion. India’s growing population is an important market for US agricultural products and today’s deal will go a long way in reducing this deficit. Among dozens of deals for ag America’s first victory at the top,” she said. Said on X.
According to those cited above, the $500 billion purchase commitment is spread over five years and includes commodities that are primarily and essentially imported by India. “For example, with its rapid economic growth, India requires airplanes worth over $100 billion including parts. Similarly, this will involve importing billions of dollars worth of crude oil and gas (Liquefied Natural Gas or LNG) every year. According to available data, in the month of November 2025 alone, India saw a 47.6% annual jump in crude oil imports from the US worth over $1.9 billion. In terms of volume, the jump 31.4% was 5,385,271 tonnes.
The $500 billion procurement commitment will also include imports of equipment for value addition in India, high-tech products, data centers and global capacity centers (GCCs) and precious metals and stones such as diamonds (except gold, which will have some form of tariff rate quota or TRQ). semiconductor. This will also include cooperation in the field of artificial intelligence (AI). The first person said, “All these technological items and sectors are important for the development of India and making it a developed country, thus it will help the Indian economy a lot.”
India may get zero duty exports to the US after the trade agreement for goods worth about $10 billion, which the US allows to almost all its FTA partners. This is in accordance with Annex III of the US Tariff Adjustment Potential for Aligned Partners (PTAAP). According to US government websites, approximately 2,000 products are eligible for reduced or zero tariffs under the PTAP, including sectors such as natural resources, coffee, tea, fruits such as bananas and oranges, tomatoes and fruit juices. This is in addition to $4 billion worth of Indian goods that have already been exempted, such as some agricultural products, papers and minerals.
Of course, the US does not impose any tariffs Tariff On these items for anyone.
As pharmaceuticals and mobile phones were already exempted, they will remain in the exempted category even after the deal, the people cited above said, adding that they are exempted as they are also part of the PTAAP.
Additionally, there are $12-13 billion worth of commodities on which the US has imposed safeguard duties, such as steel, aluminium, autos and auto components and copper. The people cited above said this matter is within the scope of the World Trade Organization and these safeguard duties are imposed on everyone.
US goods with higher sensitivity will continue to enjoy duty protection in India, while the least sensitive US goods will get immediate zero-duty access.
Sensitive commodities include dairy, grains, corn, meat, poultry, rice, wheat, GM foods, soybeans, and ethanol.
Moderately sensitive commodities such as almonds, pistachios, cherries and hazelnuts may have tariff rate quotas, while others such as lettuce and some oils will have a duty phased in over 3-10 years.
