India-US trade deal: What does the $500 billion US investment entail? List of items that India will purchase

The United States and India took a step toward a trade agreement on Friday, unveiling an interim framework aimed at cutting tariffs, reworking energy partnerships, and strengthening economic cooperation as both look to reposition global supply chains, as reported by Reuters.

The framework reaffirms a commitment to negotiations toward a broader bilateral trade agreement, the two governments said in a joint statement, while noting that further negotiations were needed to complete the pact.

U.S. President Donald Trump said on Monday that Washington had struck a deal with India to reduce U.S. tariffs on Indian goods to 18% from 50%, after New Delhi agreed to stop buying Russian oil and ease trade barriers.

Trump noted that half of the earlier 50% tariff had been imposed as a penalty for India’s purchases of Russian crude, which he said were supporting Moscow’s war in Ukraine. He signed an executive order on Friday withdrawing that 25% levy after India agreed this week to shift its oil imports to the United States and Venezuela.

New details on tariff reductions

Friday's joint statement provides additional details compared with initial outlines of the trade deal revealed by Trump on Monday.

List of items that India will purchase

It confirmed that India will buy $500 billion worth of U.S. goods over five years, including oil, gas, coking coal, aircraft and aircraft parts, precious metals, and technology products.

The technology segment includes graphics processing units commonly used in AI, along with other equipment for data centers.

"India intends to purchase USD 500 billion of US energy products, aircraft and aircraft parts, precious metals, technology products and coking coal over the next five years," the statement said.

It added that the US and India commit to address discriminatory or burdensome practices and other barriers to digital trade and to set a clear pathway to achieve robust, ambitious and mutually beneficial digital trade rules as part of the bilateral trade agreement.

It said India would scrap or cut tariffs on all U.S. industrial goods and on a broad range of U.S. food and agricultural products, including dried distillers’ grains and red sorghum used for animal feed, as well as tree nuts, fresh and processed fruit, soybean oil, wine and spirits.

US to keep 18% tariff

However, the agreement will impose an 18% tariff on most goods imported into the United States from India, including textiles and apparel, leather and footwear, plastic and rubber products, organic chemicals, home décor items, artisanal goods, and certain types of machinery.

According to the statement, India will receive the same tariff concessions offered to other U.S. allied countries under existing trade agreements for certain aircraft and aircraft parts, and will also be granted an import quota for auto parts that will be subject to a lower tariff rate.

Depending on the results of the Trump administration's tariff investigation into pharmaceuticals and their ingredients, "India will receive negotiated outcomes with respect to generic pharmaceuticals and ingredients," the statement said, as reported by Reuters.

(With inputs from Reuters)