A trade deal between India and the United States is expected by mid-March, potentially easing trade tensions and bolstering economic ties between the two nations. The agreement, reached after months of negotiation, will initially reduce U.S. Tariffs on Indian goods to 18% from a previous rate of 50%, a move that could benefit key sectors of the Indian economy.
According to Commerce and Industry Minister Piyush Goyal, the U.S. Is preparing an executive order to implement the tariff reduction, which could grab effect even before the formal signing of the interim deal. The tariff cuts will apply to nearly half of India’s exports to the U.S., with approximately 35% seeing a reduction to 18%.
The deal excludes sensitive agricultural items, but is expected to benefit sectors like farming, micro, small, and medium enterprises (MSMEs), as well as key industries. This move underscores the growing economic partnership between India and the U.S.
The initial agreement follows a phone call between Prime Minister Narendra Modi and U.S. President Donald Trump, where the trade deal was announced. A joint statement finalizing the first tranche of the agreement is anticipated within the next four to five days, Goyal said on Thursday.
The U.S. Had previously imposed 50% tariffs on several Indian exports, including a 25% punitive duty linked to India’s purchases of Russian oil. The new agreement fully withdraws the 25% additional tariff imposed due to those oil purchases, effectively lowering the overall tariff rate for Indian products.
Goyal indicated that India is prepared to meet a U.S. Request to purchase $500 billion (approximately 45,28,822 crore rupees) worth of U.S. Goods over the next five years. He expressed confidence that India could fulfill this commitment, citing the country’s growing economy and potential to shift purchases from other nations.
“India’s growing economy is expected to create a demand of approximately $2 trillion,” Goyal said. “We can potentially import around $300 billion worth of goods from the U.S. That we currently source from other countries.”
The anticipated imports from the U.S. Will likely include American energy products, aircraft and aircraft parts, valuable metals, technology products, and coking coal. Goyal also noted that several prominent tech companies have pledged significant investments in India, potentially bringing approximately 10 gigawatts of data center capacity.
India has already placed orders for approximately $80-90 billion worth of goods, and expects that figure to increase. Tata is reportedly planning to place additional orders. The country anticipates needing at least $100 billion worth of imports for the aviation sector alone, and requires approximately 17-18 billion tons of coking coal annually for its steel industry, a demand that could rise to $30 billion per year as the steel industry expands.
