WASHINGTON DC – FEBRUARY 13: US President Donald Trump and Indian Prime Minister Narendra Modi meet in the Oval Office of the White House on February 13, 2025 in Washington, DC.
Andrew Harnik | Getty Images News
The United States and India moved closer to a trade deal on Friday, announcing an interim framework that would see the two countries lower tariffs, rebuild energy ties and deepen economic cooperation as they seek to reshape global supply chains.
The two governments said in a joint statement that the framework reaffirms their commitment to negotiating a broader bilateral trade agreement, but noted that further negotiations are needed to finalize the agreement.
Separately, US President Donald Trump, in an executive order, removed a 25% tariff on Indian products for purchases of Russian crude, after New Delhi “committed to suspend direct or indirect imports” of Russian crude.
However, as the US government continues to pressure India to limit energy ties with Russia, US officials will monitor and recommend reinstatement of tariffs if India resumes sourcing oil from Russia, the order said.
The India-US joint statement does not mention India’s purchase of Russian oil or any formal commitment by India to confirm this move.
President Trump on Monday announced an agreement with India that would reduce U.S. tariffs on Indian goods from 50% to 18% in exchange for India to stop buying Russian crude oil and lower trade barriers.
Half of the 50% tax rate was separately imposed by Trump as punishment for India’s purchases of Russian oil, which he said fueled Russia’s war effort in Ukraine. After India agreed this week to shift its crude oil purchases to the United States and Venezuela, President Trump signed an executive order on Friday canceling that 25% portion.
But the statement showed New Delhi is resisting pressure from the U.S. government to broadly open agricultural markets.
Trade Minister Piyush Goyal said the agreement protects farmers’ interests and rural livelihoods by “fully protecting sensitive agricultural products and dairy products.”
He told a news conference that imports of genetically modified agricultural products will not be allowed directly as there is no such provision in the agreement, but fruits such as apples will be allowed based on tariff quotas.
Goyal declined to comment on Russian oil, saying the Ministry of External Affairs would respond.
But India’s opposition party, the Nationalist Congress Party, argued that the trade deal was concluded on US terms and hurt farmers and traders, calling it a “total abandonment” of the country’s interests.
New details on tariff reductions
Friday’s joint statement provides additional details compared to the original outline of the trade deal unveiled by President Trump on Monday.
The report confirms that India will buy $500 billion in U.S. products over five years, including oil, gas, coking coal, aircraft and aircraft parts, precious metals and technology products. The last category includes graphics processing units typically used for AI applications and other products used in data centers.
The report announced that India will eliminate or reduce tariffs on all U.S. industrial products and a wide range of U.S. food and agricultural products, including dry distillers’ grains for animal feed, red sorghum, tree nuts, fresh and processed fruit, soybean oil, wine and spirits.
US maintains 18% tariffs
But the deal would apply 18% tariffs to most imports from India to the United States, including textiles and apparel, leather and footwear, plastics and rubber, organic chemicals, upholstery, artisan products and certain machinery.
According to the statement, India will be granted the same tariff relief as other allies with trade agreements with the United States on certain aircraft and aircraft parts, and will be given a quota with lower tariff rates on imports of auto parts.
Depending on the outcome of the Trump administration’s tariff review of drugs and their ingredients, “India will receive negotiated results on generic drugs and their ingredients,” the statement said.
Goyal praised the framework agreement as opening up a market worth $30 trillion, equivalent to the annual GDP of the United States, to Indian exporters, especially farmers, fishermen and small and medium-sized enterprises.
Goyal said Thursday that the U.S. government and New Delhi aim to sign a formal trade deal in March, after which India’s tariff cuts on U.S. exports will take effect.
Acceptance of American standards
India also agreed to address long-standing non-tariff barriers to imports of agricultural products, medical equipment and communications equipment, and negotiations for an agreement that accepts U.S. or international safety and licensing standards for product imports are expected to be completed within six months.
The United States has confirmed that it intends to consider India’s request for lower tariffs on Indian products in further negotiations on a bilateral trade agreement. The two countries also agreed to cooperate in enforcing export controls on sensitive technology and take steps to address “third-party non-market policies,” which refer to China.
The United States and India have struggled for years to reach a complete trade agreement, with disputes spanning agriculture, digital trade, medical devices and market access. But strategic concerns such as competition from China, supply chain diversification and energy security have given the negotiations new urgency, officials from both countries say.
