India–US Trade Deal: 50% of Indian Exports to Get Zero Duty, 35% to Face 18% Tariff

The India–US interim trade deal could offer early relief to Indian exporters even before it is formally signed. Commerce and Industry Minister Piyush Goyal said the United States is likely to reduce tariffs on Indian exports through an executive order issued by President Donald Trump, potentially within the next few days.

The move would reset tariffs, which currently reach 50%, improving access for Indian goods in the US market and providing immediate support to labour-intensive sectors.

India–US Interim Trade Deal Could Reduce US Tariffs Within Days

According to Goyal, exporters may begin benefiting from the revised tariff structure within 4-5 days, well ahead of the legal signing of the interim trade agreement, which is targeted for mid-March.

Under the proposed tariff framework:

• Nearly 50% of Indian exports to the US are expected to attract zero duty
• Around 35% may see tariffs reduced to about 18%
• The remaining 10–15%, including steel and aluminium, will continue to be subject to Section 232 tariffs, which can reach 50%

India will continue discussions with Washington to seek relief on these sector-specific duties as negotiations progress.

India–US Interim Trade Deal: What Changed After the Latest Negotiations

The tariff reset follows a breakthrough in negotiations last week. A key development was the removal of a 25 per cent penalty linked to India’s Russian crude imports. Since August 2025, Indian exports have faced some of the highest US tariffs on any major trading partner.

Markets reacted positively to the development, with the Nifty 50 gaining 3.38 per cent over the week, reflecting optimism around improved trade conditions.

Impact on MSMEs and Export-Focused Sectors

The revised tariff regime is expected to provide immediate relief to MSMEs and export-driven industries. Sectors likely to benefit include:

• Textiles and handloom products
• Auto components and machine parts
• Leather, footwear and sports goods
• Furniture, handicrafts and light manufacturing

Lower tariffs could help exporters improve margins, stabilise orders and remain competitive in the US market.

Farm and Marine Exports: What’s Included and Excluded

Farm and marine exports are projected to see a sharp uptick, with export value expected to rise from $54 billion to $100 billion. 

Products such as tea, coffee, spices, fruits, and seafood are likely to receive zero duty or sharply reduced tariff rates.

At the same time, India has kept sensitive agricultural items completely outside the deal. These include dairy, poultry, meat, rice, wheat, sugar, soya, corn, millets, pulses, bananas and genetically modified products.

The government has stated that domestic farmers remain protected in all core areas.

Apples, DDGS and Import Safeguards

Addressing concerns around imports:

• US apples will face a minimum import price of ₹80 per kg, along with a ₹20 duty, creating a price floor higher than apples imported from other countries
• DDGS imports will be allowed under a limited quota to meet rising animal feed demand
• Large imports of soybean oil are already part of India’s existing trade structure

These measures aim to balance trade access while safeguarding domestic producers.

Chips, Motorcycles and Automobiles

The broader negotiations also include discussions on advanced technology and automobiles.

India is seeking relaxations on the supply of GPUs and Nvidia chips to support data centres, AI infrastructure, and emerging technologies.

On the automotive side:

• Tariffs on US motorcycles in the 800cc–1,600cc range are expected to be cut to zero
• Tariffs on large petrol and diesel cars will initially drop to 50% and gradually reduce to 30% over 10 years

What is the Signing Timeline of the India-US Trade Agreement? 

India has invited US Trade Representative Jamieson Greer to New Delhi to sign the interim agreement. Both sides are working toward a legally binding document that incorporates the agreed tariff concessions.

Exporters will be able to access the revised tariff structure from the date the US executive order takes effect, even as discussions continue to expand the scope of the agreement.

For traders and investors, the India–US interim trade deal tariffs signal a potential shift in export-linked sectors, MSMEs and farm-related stocks. Early tariff relief, even before formal signing, could influence earnings visibility and trade flows in the coming quarters.

Source: https://www.moneycontrol.com

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