India–US Trade Deal: Tariffs on Indian Goods to Drop from 50% to 18% Soon

In a major boost for Indian exporters, Commerce and Industry Minister Piyush Goyal on Thursday said that the steep cuts in tariffs on Indian exports to the United States will take effect “in the next 4–5 days” following the signing of a joint statement between the two countries.

India, in turn, will begin lowering its tariffs on American goods after mid-March, the minister added, marking the first phase of implementation under the broader India–US trade partnership.

First Phase of India–US Trade Partnership to Begin Soon

Speaking on the agreement, Goyal said:
“On the basis of that joint statement, the first phase of this partnership will begin between the two of us (the US and India).”

Immediately after the statement is signed, the additional tariffs on Indian exports to the US will be reduced to 18% from 50% through an Executive Order of US President Donald Trump.

The US had earlier imposed 50% tariffs on Indian exports — 25% as reciprocal tariffs and 25% for India’s purchase of Russian oil — through a presidential order.

US Tariffs Are Executive Orders, India Duties Follow MFN Rules

Commerce Secretary Rajesh Agrawal explained that while US tariffs are executive in nature, India’s import duties fall under Most Favoured Nation (MFN) rules.

“That legal agreement will give us the authority to reduce our tariffs,” Agrawal said.

Official Trade Agreement Likely by Mid-March

Joint Statement First, Legal Pact Later

Along with the joint statement, a formal legal agreement is currently being drafted. According to officials, this process may take a month to a month and a half, with the agreement expected to be signed by mid-March.

This legal framework is considered essential for India to officially start reducing duties on imports from the United States.

India Not Committing Investments in the US, Clarifies Goyal

Goyal also clarified speculation around investments following comments from the White House.

He said India has not committed any investments in the US as part of the deal. The clarification came after a White House spokesperson suggested that India would invest $500 billion in the US.

The minister explained that the confusion likely arose because India has agreed only to purchase $500 billion worth of products from the US, not invest that amount.

$500 Billion US Purchases Planned Over Five Years

“These purchases would be over the next five years,” Goyal said.

US President Donald Trump, while announcing the deal, had stated that India would buy US energy, technology, agricultural products, coal, and other goods.

Goyal added:
“With the fast-paced growth at which India is growing, we will need large volumes of energy, large numbers of data centre equipment, information communication technology products. We can clearly see before our eyes the potential that we can procure from the US over the next five years.”

Aircraft Orders Alone Could Touch $100 Billion

Highlighting India’s growing aviation demand, Goyal said:
“Our aircraft demand alone, orders placed on Boeing and yet to be placed but ready, are nearly $70-80 billion. If you add the engines and other spare parts, it will probably cost $100 billion.”

This demand is expected to form a significant part of India’s planned purchases from the US.

Minister Pitches Data Centre Manufacturing Linkage

Goyal also pointed to the opportunity in data centre investments, which recently received major concessions in the Union Budget.

“Now imagine if we get $100-150 billion dollars of investments in data centres, we will obviously need equipment for those data centres. So I think the time is right for India to boldly go forward to achieve and to mix up the two,” he said.

India–US Trade Target Set at $500 Billion by 2030

Commerce Secretary Rajesh Agrawal highlighted the broader trade vision:
“All the things that we are committed to buy are part of this deal with the United States. Our current purchases from the globe are $300 billion plus. Next five years these purchases are going to be $2 trillion. If we are able to buy $500 billion from the US, it will only add to our diversification and resilience in our supply chain.”

Under an agreement reached in February 2025 to negotiate a Bilateral Trade Agreement (BTA), India and the US aim to take bilateral trade to $500 billion by 2030.

In 2024, India–US goods and services trade stood at $212.3 billion, highlighting the scale of expansion planned under the partnership.