By Sourav Shekhar
New Delhi, Feb 9 (.) India has secured one of its most consequential trade breakthroughs in recent years with the conclusion of a landmark bilateral trade agreement with the United States.
The historical trade pact unlocks preferential access for Indian exports to the USD 30-trillion US market and delivers wide-ranging tariff relief across labour-intensive sectors, manufacturing, agriculture and high-technology industries, an official statement said.
The agreement is a decisive step in India’s global trade engagement, ensures sustained market access for Indian products while carefully shielding sensitive domestic sectors such as agriculture, dairy, meat and MSMEs.
With India’s exports to the United States valued at USD 86.35 billion in 2024, the pact significantly strengthens India’s competitive positioning in its largest export destination.
At the heart of the agreement is a comprehensive restructuring of reciprocal tariffs that earlier rose as high as 50 per cent on several Indian products.
Of the USD 40.96 billion worth of exports that were subject to these steep duties, tariffs on USD 30.94 billion have now been cut sharply to 18 per cent, while another USD 10.03 billion worth of exports will enjoy zero-duty access.
In addition, zero additional duty access has been secured for USD 1.04 billion of exports under the exemption category, providing predictability and stability for Indian exporters.
Under Section 232 provisions, products worth USD 28.30 billion will also attract zero additional duty, removing a major cost barrier that had earlier constrained market access.
This tariff overhaul creates a clear competitive advantage for India, especially as several competing exporters — including China, Vietnam, Bangladesh and other Asian economies — continue to face significantly higher tariffs in the US market.
Textiles and apparel stand out among the biggest beneficiaries. Tariffs on textile exports have been reduced from 50 per cent to 18 per cent, while silk has been granted zero-duty access to the USD 113-billion US textile market.
Products ranging from garments, carpets and bed linen to yarn, baby clothing and blankets are expected to gain from the improved access, providing a major boost to MSMEs and production clusters.
The leather and footwear sector has also received a significant lift, with tariffs reduced to 18 per cent for exports to a USD 42-billion market.
Finished leather, footwear and components are expected to see stronger demand, supporting employment generation in one of India’s most labour-intensive industries.
In gems and jewellery, tariffs have been cut to 18 per cent for exports to a USD 61-billion market, while zero-duty access has been secured for diamonds, platinum and coins covering a USD 29-billion market. Cut and polished diamonds, lab-grown stones and precious metal articles are among the key beneficiaries.
Home décor exports will now face tariffs of 18 per cent instead of 50 per cent in a USD 52-billion US market. Zero-duty access has been secured for products such as chandeliers, illuminated signs and seating items covering an additional USD 13-billion market.
Toy exports have also been brought under the reduced tariff regime, opening access to a USD 18-billion market and offering Indian MSMEs an opportunity to integrate into global supply chains.
For machinery and parts — excluding aircraft components — tariffs have been cut to 18 per cent, improving access to the USD 477-billion US machinery market.
With India’s current exports in this segment at USD 2.35 billion, the agreement is expected to accelerate growth in value-added industrial exports.
In agriculture, the agreement expands export opportunities while maintaining strong protections for farmers.
The United States will apply zero additional duty on Indian agricultural exports worth USD 1.36 billion, including spices, tea, coffee, fruits, nuts, processed foods and oil products.
Agricultural exports valued at USD 1.035 billion have been assured zero reciprocal tariffs to eliminate uncertainty.
At the same time, highly sensitive sectors such as dairy, meat, poultry, cereals, millets, pulses and oilseeds remain fully protected under an exemption framework.
Select products have been offered calibrated access through phased tariff reductions, minimum import price mechanisms or tariff rate quotas, ensuring domestic producers are not exposed to sudden import surges.
A major industrial gain comes in the form of zero-duty access for USD 38 billion worth of industrial exports. Under Section 232, products such as aircraft parts, machinery, generic drugs, pharmaceutical ingredients and elementary auto parts will face no additional duties.
Other industrial products benefiting from zero-duty access include gems and diamonds, clocks and watches, essential oils, select home décor items, inorganic chemicals, paper, plastics, wood products and natural rubber.
Beyond tariffs, the agreement deepens cooperation in digital trade, semiconductors and advanced technologies. It facilitates access to high-performance computing infrastructure, semiconductor chips, server components and critical technology inputs needed for India’s expanding data centres and the Digital India programme.
Streamlined licensing and recognition of conformity assessments are expected to reduce compliance costs, improve supply chain efficiency and enable Indian manufacturers to align with international quality standards.
In healthcare, improved access to advanced medical devices and diagnostic equipment is expected to support the expansion of high-end healthcare infrastructure and improve patient outcomes.
. SAS RB 2009