India and the US announce a temporary trade agreement that lowers tariffs and opens a $30 trillion market.

Following months of negotiations amid recent tariff tensions, India and the US announced a framework for an interim trade agreement on Saturday, indicating fresh momentum toward a larger bilateral trade pact. Donald Trump’s tariffs on New Delhi will be lowered to 18% under the new deal.

The two nations promised in a joint statement to “promptly implement this framework” and work toward finalizing the interim agreement in order to reach a mutually advantageous Bilateral Trade Agreement (BTA). They claimed that the framework reaffirmed their dedication to strengthening trade and economic relations.

“Today’s framework reaffirms the countries’ commitment to the broader US-India Bilateral Trade Agreement (BTA) negotiations, launched by President Donald J Trump and Prime Minister Narendra Modi on February 13, 2025, which will include additional market access commitments and support more resilient supply chains,” the joint statement said, calling the development “a historic milestone”.

All US industrial items and a wide range of agricultural products, such as dry distillers’ grains, red sorghum for animal feed, tree nuts, fresh and processed fruits, soybean oil, wine, and spirits, will have their tariffs eliminated or reduced by India as part of the agreement. Subject to the agreement’s completion, the United States will remove tariffs on a number of goods, including jewels and diamonds, aircraft parts, and generic medications, in exchange for lowering its reciprocal tariff rate on Indian exports to 18%.

A key player in the negotiations, Union Commerce and Industry Minister Piyush Goyal called the arrangement a historic agreement. According to him, it would provide Indian exporters access to a $30 trillion market, which would be especially advantageous for MSMEs, farmers, and fishers.

Through ongoing negotiations on the larger bilateral trade agreement, the trade framework also commits both nations to establishing clear rules of origin, enhancing regulatory cooperation, and increasing market access.

As they seek to complete the temporary accord and move forward with talks on the larger bilateral trade pact, the US and India promised to “promptly implement this framework.”The final agreement between Washington and New Delhi is anticipated to be signed by the middle of March.  The accord comes after US President Donald Trump announced earlier this week that Washington and New Delhi had agreed to drastically reduce US tariffs on Indian goods from 50% to 18% in exchange for India ceasing to buy Russian oil and removing trade restrictions.