Tariff Reductions on Key Indian Exports as India–US Interim Trade Agreement now becomes effective: PHDCCI

New Delhi, February 7, 2026: The Governments of India and the United States have finally signed an interim tariff agreement aimed at reducing trade barriers and strengthening bilateral economic cooperation. The framework was agreed upon in ongoing negotiations to expand two-way trade and to lay the groundwork for a comprehensive Bilateral Trade Agreement (BTA) said Rajeev Juneja President, PHDCCI.
Under the terms of the interim agreement the United States will apply a reciprocal tariff rate of 18 per cent on Indian-origin goods, which include textiles, apparel, leather and footwear, plastics and rubber, organic chemicals, home décor, artisanal products, and certain machinery, he said. Tariffs on specific Indian export categories — notably generic pharmaceuticals, gems and diamonds, and aircraft parts — are scheduled for removal, contingent on successful implementation and finalisation of the interim agreement, he said.
The United States will also lift certain national security-related tariffs previously applied on Indian aircraft and aircraft parts under steel, aluminium, and copper measures, he added. Based on the announced tariff adjustments, the following Indian sectors are expected to see positive trade effects:
1. Pharmaceuticals (Generic Drugs) Reduced tariff barriers improve access to the U.S. market for Indian generic drug manufacturers.
2. Gems and Jewellery Expected to support exports from India’s cutting and polishing industry, improving margins and export volumes.
3. Aviation and Aircraft Components Removal of tariffs on aircraft and aircraft parts benefits India’s emerging aerospace manufacturing, maintenance, repair and overhaul (MRO), and component supply ecosystem.
4. Textiles and Apparel Application of a lower reciprocal tariff rate enhances competitiveness for Indian textile and garment exporters in the U.S. market, particularly in labour-intensive segments.
5. Engineering Goods and Machinery Reduced trade friction supports exports of industrial machinery, auto components, and fabricated metal products.
6. Chemicals and Plastics Organic chemicals, plastics, and rubber products benefit from improved price competitiveness and expanded market access.
7. Handicrafts and Home Décor Artisanal products, home décor, and lifestyle goods are expected to gain from improved tariff treatment and stable access to the U.S. consumer market.
The joint statement accompanying the agreement highlights that implementation of these tariff measures will commence promptly, with detailed operational guidelines to be issued by the competent authorities. Both sides have reaffirmed their commitment to pursue a full BTA that encompasses goods, services, digital trade, investment cooperation and supply chain resilience, he added.
This interim tariff agreement marks a significant development in U.S.–India trade relations, potentially expanding market access for exporters in both countries and providing a stable and comprehensive trade framework said Dr. Ranjeet Mehta, CEO & Secretary General, PHDCCI.