Roving Periscope: With trade deal, India can reach $30 trillion US market, says Goyal
Virendra Pandit
New Delhi: India and the United States announced having reached a framework for an interim trade agreement which Union Commerce and Industry Minister Piyush Goyal said will give India access to the USD 30 trillion market in the USA, the media reported on Saturday.
The announcement potentially ends a months-long impasse between the two countries. Their ongoing talks will continue to arrive at a full and detailed bilateral trade agreement (BTA) in the next couple of months.
The confirmation of the agreement came days after US President Donald Trump spoke to Prime Minister Narendra Modi and said India had agreed to stop buying Russian oil, which had prompted his administration to impose a total of 50 percent tariff on imports from India in 2025.
Accordingly, India will open its vast market to imports of most US industrial goods and some food products. Indian exports to the US will face an 18 percent “reciprocal” tariff, according to a joint statement published by New Delhi early on Saturday that sets out a few more details of the agreement, the reports said.
India also said it “intends” to increase imports from the US, buying USD 500 billion worth of energy, aircraft and aircraft parts, metals, technology products and coking coal over the next five years. The target would be roughly double India’s current level of imports from the US.
The two sides also agreed to address non-tariff barriers affecting trade, with India vowing to remove “restrictive import licensing procedures,” a longtime irritant in the two countries’ commercial ties. In 2025, they agreed to work towards a BTA during a visit by PM Modi to Washington, but the talks stalled and both sides’ positions hardened, including over India’s resistance to opening its massive agricultural market.
The Trump administration then put a 50 percent tariff on India, including a 25 percent punitive levy because of New Delhi’s purchases of Russian oil, which the US claimed was helping to finance Russia’s ongoing war in Ukraine.
In an executive order late on Friday, President Trump said India “has committed to stop directly or indirectly importing Russian Federation’s oil”, committed to buy US energy products and recently agreed to expand defence co-operation with the US. He had “determined to eliminate the additional ad valorem rate of duty imposed on imports” from India, the order said.
It said the US would “monitor whether India resumes directly or indirectly importing Russian Federation oil” and that if it found it did, would consider taking “additional action”, including reimposing the 25 percent levy.
India has not so far clarified how it will end purchases of oil from Russia. While imports have fallen, Russia remains India’s largest supplier of crude.
“Great news for India and USA!” PM Modi declared in a post on X. “We have agreed on a framework for an Interim Trade Agreement between our two great nations.” He thanked President Trump for his “personal commitment to robust ties between our countries”.
“President Trump’s dealmaking is unlocking one of the largest economies in the world for American workers and producers, lowering tariffs for all US industrial goods and a wide array of agricultural products,” US Trade Representative Jamieson Greer said in a statement.
During the trade talks, India took a hard line on protecting its politically sensitive farming and dairy markets. However, in the joint statement, India said it would remove or reduce tariffs for a “wide range of US food and agricultural products”, including dried distillers’ grains, red sorghum for animal feed, nuts, fruit, soya bean oil, wine, and spirits.
Welcoming the announcement, Union Minister for Commerce and Industry Piyush Goyal said that the understanding with the US would “open a $30tn market for Indian exporters.”
He said the agreement with the US would “completely protect” India’s sensitive agricultural and dairy products, including maize, wheat, rice, soya, poultry, milk and cheese.
The interim trade framework marks an important reset in bilateral economic engagement after negotiations dragging on for nearly a year. Coming days after US President Donald Trump publicly announced that the two sides had reached a trade deal, it formalises a significant understanding on tariffs, market access and sectoral cooperation, even as details will be decided in further negotiations.
The US will cut the so-called “reciprocal” levy faced by Indian products, bringing the effective tariff rate down to 18 percent. More significantly, the additional 25 per cent tariff imposed earlier by Trump, linked explicitly to India’s purchases of Russian oil, has been eliminated altogether.
The US-India joint statement on the framework also makes clear that while the US has secured incremental access in several areas, it ultimately stopped short of crossing India’s red lines in agriculture and dairy, the most contentious chapters of the negotiations.
