Half of India’s exports to US could turn duty-free under interim trade deal
India and the United States have reached a new trade deal that aims to reduce tariffs and increase trade between the two countries. The agreement is expected to benefit many sectors and open new market opportunities.
3 min read
India and the United States have announced a new trade agreement that will impact how goods are traded between the two countries. The deal is part of an effort to reduce tariffs and increase economic ties.
In February 2026, both nations made key announcements about their trade future. India and the U.S. have agreed on a framework for an interim trade deal. This deal aims to make trade easier and more beneficial for both countries.
On February 2, 2026, the U.S. President announced that tariffs on Indian goods will be reduced from 25% to 18%. This change depends on India agreeing to stop buying Russian oil. The new tariffs will lower the costs for Indian exports to the U.S.
Later, on February 7, 2026, Indian officials shared more details about the trade agreement. India’s Commerce Minister said that many important products, like gems, medicines, coffee, and mangoes, will be allowed to be exported duty-free to the U.S. This means these items will not have additional taxes, making them cheaper for American buyers.
The deal also protects some sensitive agricultural and dairy products. These include maize, wheat, rice, soybeans, poultry, milk, cheese, ethanol, tobacco, and certain vegetables and meats. These products will not face new duties under the agreement.
Prior to this deal, over 40% of India’s exports to the U.S. already faced no duties. These included electronics, medicines, petroleum products, and beverages like tea, coffee, and spices. The new agreement will reduce tariffs on other Indian goods to 18%, down from the previous 50%.
A significant part of the deal involves India’s commitment to buy American products worth around 500 billion dollars. This purchase goal shows both countries’ desire to increase economic cooperation.
The agreement has been described as “reciprocal and mutually beneficial.” Both nations have agreed to work together to develop a broader trade deal. This future deal could improve market access and strengthen supply chains, making trade more resilient.
Not everyone agrees with the deal. Some in India, including opposition groups, criticized it for favoring the U.S. too much. They believe the agreement could pose risks to India’s sensitive sectors, especially agriculture.
Despite these concerns, Indian officials like the trade minister have confirmed that key sectors like dairy and certain crops are protected under the new trade rules. This protection helps safeguard India’s agricultural interests.
India's move towards better trade relations continues. The country has already signed other trade agreements with the European Union, Oman, and New Zealand. These steps show India’s aim to expand its global trade partnerships.
The new trade agreement is expected to boost sectors in India that are labor-intensive and export-oriented. This includes industries that use a lot of manual labor and produce goods for export, which could create more jobs and economic opportunities.
Overall, the deal marks an important step in strengthening economic ties between India and the U.S. It aims to make trade easier, reduce costs, and open new markets. Both countries hope that these changes will benefit their economies and support continued growth and cooperation.
