India-US trade deal: These items are subject to 18% tariff
What's the story
India and the United States have announced an interim trade framework as a precursor to their Bilateral Trade Agreement (BTA). The framework was revealed after months of negotiations. It commits both nations to expand trade and reduce US reciprocal tariffs to 18%. Under this arrangement, India will cut or eliminate tariffs on all US industrial goods and a wide range of other products.
Tariff details
Reciprocal tariff on Indian exports
In return, the US will impose a reciprocal tariff rate of 18% on Indian exports, with the possibility of further cuts as negotiations progress. The sectors covered by this tariff include textiles and apparel, leather and footwear, plastic and rubber products, organic chemicals, home decor items, artisanal products, and certain machinery.
Tariff removal
Removal of tariffs on Indian aircraft and parts
The US has also agreed to remove tariffs on Indian aircraft and aircraft parts imposed under previous national security proclamations concerning aluminum, steel, and copper imports. This is part of a broader commitment by both countries to offer each other preferential market access in sectors of mutual interest on a sustained basis.
Market access
Addressing non-tariff barriers and standards
India has also agreed to tackle long-standing non-tariff barriers on US food and agricultural products, recognizing the necessity to resolve persistent market access concerns. The two countries will also discuss standards and conformity assessment procedures in mutually agreed sectors for improved ease of compliance. If either country changes agreed tariff levels in the future, the other country may change its commitments accordingly.
Future plans
Interim framework as a precursor to BTA
The interim framework is seen as a stepping stone toward a full BTA. The US has said it will consider India's request for more tariff reductions on Indian goods during BTA negotiations. India has also expressed its plan to purchase $500 billion worth of US energy goods, aircraft and aircraft parts, precious metals, technology products and coking coal over the next five years.