Commerce Secretary Rajesh Agrawal Wednesday said India and the US could sign the trade deal’s first tranche by the end of March after having agreed on its broad contours earlier this month. The signing of the deal is expected to lower the reciprocal tariffs on Indian goods from 25% to 18%. Washington has already rolled back the additional 25% tariffs imposed on August 27 last year over India’s purchase of Russian oil.
“We expect that by the end of March… before the end of March.. we should be able to finalise and sign the legal agreement. However, having said that, I think drafting a legal agreement …and to the satisfaction of both sides… it also sometimes may take time. But we are hopeful, the teams are working on it, and we should look at March as the timeline in which we should make it operational,” Agrawal told ANI on the sidelines of BIOFACH Germany 2026, a trade fair for organic products.
He said the joint statement that India and the US have released lays down the broad contours of the interim agreement, and that this agreement needs to be converted into a legal document.
As per the joint statement, India agreed to “eliminate or reduce tariffs” on all US industrial goods and a wide range of American food and agricultural products, including dried distillers’ grains (DDGs), red sorghum for animal feed, tree nuts, fresh and processed fruit, soybean oil, wine and spirits, and additional products.
The US agreed to apply a reciprocal tariff rate of 18% on Indian goods, including textiles and apparel, leather and footwear, plastic and rubber, organic chemicals, home décor, artisanal products, and certain machinery.
“Subject to the successful conclusion of the interim agreement, will remove the reciprocal tariff on a wide range of goods identified in the Potential Tariff Adjustments for Aligned Partners,” the joint statement said. The US also agreed to remove tariffs on certain aircraft and aircraft parts from India.
International trade expert and think tank Global Trade Research Initiative Founder Ajay Srivastava said tariff reductions on US fresh fruits such as apples and oranges, and on soybean oil, are likely to hurt Indian farmers and could face strong opposition from farmer groups.
Story continues below this ad
“India has earlier agreed to limited tariff reductions on automobiles under its FTAs with the UK and the EU, but it is not clear whether concessions to the US involve limited quotas and limited duty cuts or unlimited quota and full tariff elimination. Further, tariff elimination on electronic components, smartphones, and solar panels could adversely affect domestic manufacturing of these products in the future,” Srivastava said.
The former trade officer said the US, in return, will not reduce regular most favoured nation (MFN) tariffs on any products and will only lower reciprocal tariffs that currently apply to about 55% of Indian exports to America, bringing them down from 50% to 18%.
Suresh Nair, tax partner, EY India, said the interim US-India trade deal should make quite a few American farm products cheaper here in India — things like soybean oil, tree nuts, fresh and processed fruits, dried distillers’ grains and red sorghum for animal feed, and wines and spirits. India is cutting or scrapping tariffs on these and addressing some longstanding non-tariff barriers that have restricted supply.
“That should bring retail prices down for premium nuts, fruits, wines, and particularly soybean oil, making them more accessible to middle-class households and potentially easing input costs for food processors and the livestock sector. On the energy side, the agreement doesn’t alter tariffs on oil or energy imports directly, but India’s stated intent to purchase $500 billion worth of US energy products (among other items) over the next five years should lead to larger, steadier volumes coming in, which could help stabilise supply and support more competitive pricing in the longer term, though retail fuel prices will still be influenced by global markets and domestic policies,” Nair said.
