Details of India-US interim trade deal: Which sectors benefit, what’s protected

After their ties plummeted for some time in 2025, thanks to India’s military skirmishes with Pakistan and US President Donald Trump’s announcement to impose steep tariffs on Indian goods as penalty for buying oil from Russia, things have taken a welcome turn for the better as the two democracies reached a framework for an interim deal related to trade which is "reciprocal" and "mutually beneficial".

Also read: How India-US trade deal map sends a diplomatic signal to Pakistan

Experts, however, are not unanimous in their valuation of the deal, with some saying it is not in India’s favour and only shows Trump’s powerful extractive ploy whereby he weaponises trade strategies to gain advantages from other economies around the globe. Others have welcomed it saying it would make India's exporters become competitive.

Highlights of the interim deal

The interim trade agreement framework looks to lessen barriers and bolster the trade and economic ties between the two large democracies.

US slashes tariff to 18pc

Under the deal, Washington will implement a reciprocal tariff rate of 18 per cent from 50 per cent (including slashing of the punitive 25 per cent additional duty slapped owing to New Delhi’s oil trade with Moscow), on various goods and products originating from India. Furthermore, after the successful conclusion of the interim agreement, the reciprocal tariff will also be lifted on a broad array of goods, including generic pharmaceuticals.

India's key sectors to benefit:

Since the US will apply the 18 per cent tariff uniformly on a range of Indian exports that earlier faced a steep duty, the lowering of the rate will benefit key sectors such as:

• Textiles and apparel, leather and footwear, plastic and rubber goods
• Home décor
• Machinery and chemicals
• Artisanal goods
• Generic pharmaceuticals
• Gems and diamonds
• Aircraft parts

Indian products that will face zero reciprocal tariffs in the US:

Agricultural products: Tea, spices, coffee, coconut oil, copra, vegetable wax and others.

Fruits and vegetables: Banana, mango, guava, avocado, papaya, pineapple and others.

Cereals and seeds: Barley, poppy seeds, sesame seeds.

Processed foods, beverages: Bakery products, citrus juices, tea, coffee and cocoa products.

What about alcohol?

Alcohol is clearly categorised as open item rather than protected. It does not pose competition to Indian farmers and, as such, is not included in the sensitive list.

Removal of tariffs on specific aircraft, aircraft parts

The US will also eliminate tariffs on specific aircraft and aircraft components from India that were imposed to address national security concerns. In a similar vein, in alignment with US national security standards, India will be granted a preferential tariff rate quota for automotive components that are subject to the tariff aimed at mitigating national security.

Also read: India, US seal trade deal framework; tariffs on Indian goods cut to 18pc

India is also set to either eliminate or lower tariffs on all industrial goods from the US, as well as on a diverse array of American food and agricultural items.

Items to be affected:

• Dried distillers grains
• Tree nuts
• Soybean oil
• Red sorghum
• Select fruits
• Wines and spirits

India to also eliminate or reduce tariffs

India will eliminate or reduce tariffs on all US industrial goods and a wide range of American food and agricultural products, including dried distillers’ grains (DDGs), red sorghum for animal feed, tree nuts, fresh and processed fruit, soybean oil, wine and spirits, and additional products.

These sectors will see an effect:

• Machinery
• Electricals
• Chemicals
• Vehicles and components

India plans to purchase USD 500bn of US products

Under the pact, India plans to buy USD 500 billion worth of American energy products, aircraft and aircraft components, precious metals, technology items, and coking coal in the next five years.

The interim agreement will also facilitate the Indian exporters’ access to the world’s largest economy. In a post on X, Commerce Minister Piyush Goyal said, “This (the framework) will open a $30 trillion market for Indian exporters, especially MSMEs, farmers and fishermen. The increase in exports will create lakhs of new job opportunities for our women and youth.”

Also read: India seen as trusted trade partner: PM Modi in Malaysia after US, EU deals

India not exposing everything: Here is what it shields

The minister said the US agreement also speaks about India’s commitment to safeguarding the interests of its farmers and sustaining rural livelihoods by protecting sensitive agricultural and dairy products. It means the country is firm on protecting its staple crops and key food items as well as its peasant community.

Food items that India seek to protect by not allowing US exporters' access:

• Wheat and rice
• Maize
• Soya and oilseeds
• Poultry and certain meat categories
• Milk, cheese and entire dairy industry
• Ethanol
• Tobacco
• Certain Vegetables

Trade in technology products

India and the United States will significantly increase trade in technology products, including Graphics Processing Units (GPUs) and other goods used in data centres, and expand joint technology cooperation.

Sectors to be affected are:

• AI hardware and GPUs
• High‑end servers
• Data‑centre equipment
• Semiconductor inputs

India has consented to tackle enduring obstacles to the trade of American medical devices; and will abolish restrictive import licensing processes that hinder market access for Information and Communication Technology (ICT) products.

The US and India also pledge to offer each other preferential market access in sectors of mutual interest consistently.

What experts said

Geostrategic expert Brahma Chellaney was not amused. In a post on X, he said, “The trade deal with India adds another feather to Trump’s extractive cap. His weaponized trade strategy — after extracting U.S.-investment commitments of $550 billion from Japan, $350 billion from South Korea and $70 billion from Malaysia — has now coerced India into pledging $500 billion in imports of American products over the next five years, as the newly released joint statement makes clear.”

Sachchidanand Shukla, group chief economist, Larsen & Toubro, called the deal a good one based on the joint statement. According to a report by The Times of India, he was glad that no sensitive agricultural and dairy opening took place and preferential access was provided for India's pharma, auto, industrial and metal industries. He, however, said that the final words and their implementation would be key.

Ranen Banerjee, Government Sector Leader, PwC India, told The Times that Indian exporters of job-intensive sectors such as textiles, leather and jewellery would get market access at lowered tariff rates, turning them competitive.