The India-US trade agreement protects all sensitive sectors for New Delhi, Union commerce minister Piyush Goyal said, signalling the government’s commitment to the welfare of farmers, fishermen and the dairy sector.
Once the agreement takes effect, US tariffs on Indian goods will fall from a steep 50% to 18%, reviving the competitiveness of Indian exports. While the full contours of the agreement are not released yet, the minister said the trade pact is currently in the final stages of technical detailing between the negotiating teams of both countries.
“A joint statement by India and the US will be issued shortly once the final understanding is inked and the technical processes are completed,” Goyal said on Tuesday, adding that details would be shared thereafter. “I want to assure the people of India that this is a deal that will make every Indian proud. It protects the interests of the country and provides significant opportunities for all sections of society,” Goyal said.
Goyal said that what commerce ministry officials were not able to achieve over several months had been accomplished by the Prime Minister in a single day through a well-negotiated trade agreement.
India and the US agreed to conclude a comprehensive bilateral trade agreement on 13 February last year, during Prime Minister Narendra Modi's meeting with President Donald Trump. Talks towards the agreement to expand annual bilateral trade to $500 billion by 2030, however, were plagued by tariff threats and slow progress. US tariffs on most Indian goods now stand at 50%, including a 25% punitive tariff linked to New Delhi’s Russian oil purchases.
On Tuesday, Goyal emphasized that the agreement safeguards sensitive sectors, particularly agriculture and the dairy sector, while opening up large opportunities for Indian exporters in textiles, plastics, apparel, leather and footwear, gems and jewellery, organic chemicals, rubber goods, machinery and aircraft components.
Goyal also said that India’s growing demand for information and communication technology products, data centre equipment, high-quality technology and innovation, as well as raw materials, would be supported by the deal. At a time when India is scaling up manufacturing, digital infrastructure and data centre capacity, he said, “The agreement enables access to best-in-class technologies and critical inputs at more competitive costs.”
The government sees this as a significant strategic gain, as it aligns India’s trade policy with its broader push on electronics manufacturing, artificial intelligence, cloud infrastructure and advanced industrial capabilities, while strengthening the foundations of the country’s growth trajectory and the Indian economy.
On the proposed $500 billion trade figure mentioned by US president Donald Trump in his social media post, a senior official said the purchases would be spread over a five-year period, with aircraft and energy likely to be a key component of the imports.
In agriculture, the official said that certain goods have been allowed under tariff rate quotas (TRQs), but these products are not sensitive from India’s perspective and have negligible domestic production, thereby limiting any adverse impact on Indian farmers.
In his social media post, Trump said that he spoke to Prime Minister Narendra Modi earlier in the day and that the agreement was reached “effective immediately.” The two leaders discussed a range of issues, including trade and efforts to end the war between Russia and Ukraine, he claimed. Trump also said that Modi had agreed to stop India’s Russian oil purchases and instead buy more energy from the US and, potentially, Venezuela. The US president said India would buy more than $500 billion worth of US energy, technology, agricultural products, coal and other goods, and commit to “Buy American” at a much higher level.
Prime Minister Narendra Modi said, “Wonderful to speak with my dear friend President Donald Trump today. Delighted that Made in India products will now have a reduced tariff of 18%. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement.”
Clarity on unanswered issues is expected only after the release of the joint statement. Key questions include whether India has committed to ending purchases of Russian oil, whether crude from the US and Venezuela will replace Russian supplies, which US products India has agreed to offer duty-free access to, and whether the revised 18% tariff includes the existing most-favoured-nation (MFN) duty or is imposed over and above it.
Arvind Shrivastava, secretary, department of revenue, ministry of finance, said, “The India–US trade deal will further expand and deepen trade between two of the largest economies of the world. It will create more opportunities for our labour-intensive and manufacturing sectors in the US market and give impetus to mutually beneficial collaboration in high and advanced technology sectors.”
“This tariff reduction is expected to increase our jewellery export business by 25% to 50%, giving India’s gems and jewellery sector a powerful boost in the US market,” said Rajesh Rokde, chairman, All India Gem & Jewellery Domestic Council (GJC).
“Indian exporters have been actively diversifying into newer markets and products and, in many cases, absorbing margin pressures to remain competitive globally, particularly in labour-intensive sectors hit by higher tariffs. While exports to the rest of the world have remained resilient, shipments to the US have come under pressure,” said Madhavi Arora, chief economist, Emkay Global Financial Services Ltd.
“The trade deal removes a major source of uncertainty for India’s exports, but it should not lead to complacency. India will need to continue negotiating pragmatically with other markets, build scale in select export verticals and improve export efficiency to sustain growth,” Arora added.
In a strategy note, Bernstein, a global equity research firm, said that while the removal of the 25% punitive tariffs could provide positive momentum in the near term, the impact may not last beyond a month. A broader India-US trade deal, it said, is likely to remain volatile and subject to frequent policy changes. The signing of the trade treaty could trigger a swift market rally, but this is expected to fade as policy uncertainty persists through the year.
From a sectoral standpoint, Bernstein said that externally facing sectors are likely to see a short-lived rally. It added that it would position IT stocks to benefit from the easing of risks related to further policy actions as bilateral relations improve.
Among export sectors, gems and jewellery, which accounted for 11.5% of India’s exports to the US in CY24, textiles and apparel, with an average tariff of 3.2%, and machinery and equipment, which made up 8.1% of exports, are expected to be the immediate beneficiaries of the trade deal, according to Elara Securities.
Automobiles, which accounted for 3.3% of India’s exports to the US in CY24, are unlikely to see much relief, as tariffs under Section 232 remain in force, it said in a note.
The timing of Trump’s announcement is also notable as it follows India’s Union Budget for FY27, parts of which sought to address challenges arising from higher US tariffs, and comes days after New Delhi announced the conclusion of negotiations for what it described as the “mother of all trade deals” with the European Union on 27 January, underscoring India’s push to lock in major trade pacts with key partners.
Until President Donald Trump’s return to the White House on 20 January 2025, US tariffs were largely a non-issue for Indian exporters. That low-tariff environment ended in April 2025, when Washington imposed sweeping reciprocal duties, sending the US trade-weighted average tariff into double digits for the first time in decades.
Before the 2025 upheaval, official data show the average US customs duty on Indian imports stood at around 2.8%, broadly stable for decades, while US goods faced a weighted average tariff of 7.7% in India. In agriculture, Indian farm exports to the US faced a 5.3% duty, whereas US farm exports to India attracted 37.7%. Industrial exports to the US faced just 2.6%, compared with 5.9% for American goods entering India.
Exports to the US, India’s largest overseas market, rose month-on-month in December, indicating that demand held up despite higher tariffs, even as exporters faced pricing and margin pressures. Exports in December rose to $7.01 billion from $6.98 billion in November, despite stiff tariffs. Shipments in the first nine months (April–December) of the current fiscal year also rose about 10% to $65.88 billion.
Bilateral goods trade between India and the US stood at $105.31 billion during April–December, with India recording a trade surplus of $26.45 billion. This compares with bilateral trade of $94.97 billion in the corresponding period of the previous fiscal, when the trade surplus stood at $25.09 billion.
Earlier, in November last year, the US had exempted a group of agricultural and food-related products from the reciprocal tariffs imposed earlier in the year. The 14 November decision removed commodities such as coffee, tea, tropical fruits, spices, cocoa, bananas, tomatoes, beef and certain fertilisers from the 2 April tariff list. These products were to face only normal most-favoured-nation (MFN) duties, instead of higher reciprocal tariffs of up to 50%.
About 30% of India’s exports to the US, including electronics, energy products and medicines, have been kept outside the tariff net. In contrast, labour-intensive sectors such as textiles, gems and jewellery, and seafood continue to bear the brunt of the 50% tariff that came into effect on 27 August.