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Ministry of Commerce & Industry
The United States-India Joint Statement mentions that the two nations have reached a historic framework for an Interim Agreement regarding reciprocal and mutually beneficial trade. Announced on February 7, 2026, this framework reaffirms the commitment to the broader U.S.-India Bilateral Trade Agreement (BTA) negotiations launched in early 2025. The agreement represents a significant shift toward balanced trade based on concrete outcomes, aiming to foster more resilient supply chains and enhanced economic security alignment between the two partners.
Strategic Pillars of the Interim Trade Framework The framework identifies three core pillars of reform driving the bilateral economic partnership:
Reciprocal Tariff Rationalization: India will eliminate or reduce tariffs on all U.S. industrial goods and a wide range of agricultural products. In exchange, the U.S. will apply a reciprocal tariff rate of 18 percent on specific Indian goods while removing retaliatory tariffs on generic pharmaceuticals, gems, and aircraft parts.
Elimination of Non-Tariff Barriers: Both nations commit to addressing systemic barriers, including medical device regulations and restrictive import licensing for ICT goods. India has specifically agreed to determine the acceptability of U.S.-developed standards for imports within six months of the agreement’s enforcement.
Energy and Technology Cooperation: The framework envisions a massive scaling of trade in technology products, particularly Graphics Processing Units (GPUs) and data center infrastructure. Both countries will collaborate on supply chain resilience and inbound/outbound investment reviews to address non-market policies of third parties.
Key Trade and Economic Metrics The analysis grounds these pillars in specific commitments and outcomes:
Indian Purchase Commitment: India intends to purchase $500 billion of U.S. energy products, aircraft, precious metals, and coking coal over the next 5 years.
Tariff Reciprocity: A reciprocal tariff rate of 18 percent will be applied under U.S. Executive Order 14257 on goods including textiles, leather, and organic chemicals.
Security-Related Tariff Relief: The U.S. will remove tariffs on Indian aircraft parts previously imposed under Section 232 national security proclamations for steel, aluminum, and copper.
Preferential Quotas: India will receive a preferential tariff rate quota for automotive parts subject to U.S. national security requirements.
What are “Rules of Origin” in the context of the U.S.-India Interim Agreement? Rules of Origin refer to the criteria used to determine the national source of a product for the purpose of international trade. In the context of this agreement, the U.S. and India have committed to establishing rules that ensure the preferential benefits—such as tariff reductions and market access—accrue predominantly to businesses and workers within the two signatory nations. This prevents third-party countries from using one partner as a “backdoor” to access the other’s market at reduced rates, thereby strengthening the bilateral economic security and supply chain resilience of the partnership.
Policy Relevance
The trade framework represents a transition from traditional diplomacy to outcome-based economic statecraft. By institutionalizing a $500 billion purchase commitment and reciprocal tariff structures, the Ministry of Commerce is securing long-term supply chain stability for India’s energy and technology sectors.
Strategic Impact:
Securing Energy and Aviation Hubs: The $500 billion commitment ensures a steady supply of coking coal and aircraft parts, supporting India’s growing domestic aviation industry and metallurgical requirements.
Strengthening Pharma Exports: The removal of reciprocal tariffs on generic pharmaceuticals provides a significant boost to India’s “Pharmacy of the World” mission, ensuring deeper penetration into the U.S. market.
Global Tech Leadership: The focus on GPUs and data center trade aligns with the IndiaAI Mission, providing the essential hardware needed to scale India’s sovereign AI capabilities.
Reforming Standards Governance: India’s agreement to review U.S.-developed standards within six months signals a move toward international regulatory harmony, reducing the cost of compliance for Indian exporters.
Relevant Question for Policy Stakeholders: How can the Ministry of Commerce and Industry incentivize Indian MSMEs in the textile and footwear sectors to leverage the 18 percent reciprocal tariff rate to compete more effectively against third-party exporters in the U.S. market?
Follow the full news here: U.S.-India Joint Statement on Interim Trade Agreement | PIB