For this article:

8 Feb 2026·Source: The Hindu
4 min
International RelationsEconomyNEWS

India and U.S. Reach Trade Deal Framework

India and the U.S. agree on a trade deal framework.

India and the U.S. have agreed on a framework for a trade deal. India will reduce or remove tariffs on industrial and agricultural goods from the U.S.

In return, the U.S. will reduce tariffs on Indian imports to 18%. The joint statement did not mention India's imports of Russian oil.

The U.S. President signed an amendment to remove the additional 25% tariff on imports from India. India intends to purchase $500 billion of U.S.

energy products, aircraft, precious metals, technology products, and coking coal over the next 5 years.

Key Facts

1.

India will reduce or remove tariffs on industrial and agricultural goods from the U.S.

2.

The U.S. will reduce tariffs on Indian imports to 18% from the existing 50%.

3.

The joint statement did not mention India’s imports of Russian oil.

4.

India intends to purchase $500 billion of U.S. energy products, aircraft, precious metals, technology products, and coking coal over the next 5 years.

UPSC Exam Angles

1.

GS Paper 2 - International Relations: Bilateral agreements involving India and/or affecting India's interests

2.

Connects to syllabus topics on trade agreements, economic diplomacy, and India's foreign policy

3.

Potential question types: Statement-based, analytical questions on the significance of the trade deal

Visual Insights

Key Figures from India-U.S. Trade Deal Framework

Highlights of the proposed trade deal between India and the U.S.

U.S. Tariff Reduction on Indian Imports
18%

Significantly lower tariffs can boost Indian exports to the U.S.

India's Planned Purchase of U.S. Products
$500 Billion

Increased imports from the U.S. will boost the U.S. economy and strengthen trade relations.

Additional Tariff Removed on Indian Imports by U.S.
25%

Removal of the additional tariff will make Indian products more competitive in the U.S. market.

More Information

Background

The foundation of trade relations between India and the U.S. can be traced back to India's independence. Initially, economic ties were limited due to India's focus on socialist policies and non-alignment during the Cold War. However, the seeds of future cooperation were sown through various agreements and dialogues. The General Agreement on Tariffs and Trade (GATT), the precursor to the World Trade Organization, provided a framework for these early interactions. Over the decades, the relationship evolved, particularly after India's economic liberalization in 1991. This led to increased trade and investment flows between the two countries. Key milestones include the establishment of various joint working groups and forums to address trade barriers and promote economic cooperation. The Indo-U.S. Trade Policy Forum, for example, has been instrumental in identifying and resolving trade-related issues. These efforts laid the groundwork for more comprehensive trade agreements. The legal and constitutional framework governing trade relations involves various domestic laws and international agreements. In India, the Foreign Trade (Development and Regulation) Act, 1992 provides the legal basis for regulating foreign trade. The Constitution of India also empowers the government to enter into international treaties and agreements, which are then implemented through domestic legislation. These frameworks ensure that trade policies are aligned with both national interests and international obligations.

Latest Developments

Recent developments in India-U.S. trade relations include increased engagement on digital trade and intellectual property rights. The two countries have been working to address issues related to data localization and cross-border data flows. Initiatives like the U.S.-India Strategic Partnership Forum have played a crucial role in fostering dialogue and identifying areas of mutual interest. There are ongoing debates regarding market access and tariff barriers. Some stakeholders advocate for greater liberalization and reduction of tariffs to boost trade volumes. Others emphasize the need to protect domestic industries and ensure fair competition. Institutions like NITI Aayog have been involved in formulating policy recommendations to balance these competing interests. The future outlook for India-U.S. trade relations appears positive, with both countries expressing a commitment to deepening economic ties. Potential areas of growth include clean energy, healthcare, and advanced manufacturing. The goal is to create a more resilient and diversified trade relationship that benefits both economies. Further negotiations and agreements are expected to address outstanding issues and unlock new opportunities.

Practice Questions (MCQs)

1. Consider the following statements regarding the recent trade deal framework between India and the U.S.: 1. India will reduce or remove tariffs on industrial and agricultural goods from the U.S. 2. The U.S. will reduce tariffs on Indian imports to 25%. 3. The joint statement explicitly mentioned India's imports of Russian oil. Which of the statements given above is/are correct?

  • A.1 only
  • B.2 only
  • C.1 and 3 only
  • D.None
Show Answer

Answer: A

Statement 1 is CORRECT: According to the news, India will reduce or remove tariffs on industrial and agricultural goods from the U.S. Statement 2 is INCORRECT: The U.S. will reduce tariffs on Indian imports to 18%, not 25%. Statement 3 is INCORRECT: The joint statement did not mention India's imports of Russian oil.

2. In the context of the recent India-U.S. trade deal framework, consider the following: Assertion (A): The U.S. President signed an amendment to remove the additional 25% tariff on imports from India. Reason (R): This amendment aims to foster stronger economic ties and increase trade volume between the two nations. In the context of the above, which of the following is correct?

  • A.Both A and R are true, and R is the correct explanation of A
  • B.Both A and R are true, but R is NOT the correct explanation of A
  • C.A is true, but R is false
  • D.A is false, but R is true
Show Answer

Answer: A

Assertion (A) is TRUE: The U.S. President did sign an amendment to remove the additional 25% tariff on imports from India, as stated in the news. Reason (R) is TRUE and is the correct explanation of A: The removal of the tariff aims to strengthen economic ties and increase trade volume between the two nations, which is the primary goal of such trade agreements.

3. Which of the following sectors is NOT explicitly mentioned as a target for India's intended purchase of $500 billion worth of goods from the U.S. over the next 5 years?

  • A.Energy products
  • B.Aircraft
  • C.Precious metals
  • D.Pharmaceuticals
Show Answer

Answer: D

According to the news, India intends to purchase $500 billion of U.S. energy products, aircraft, precious metals, technology products, and coking coal over the next 5 years. Pharmaceuticals are not mentioned as a specific target sector.

Source Articles

Highlights of India-U.S. interim trade framework - The Hindu

The Hindu·8 Feb 2026

India-U.S. trade deal Updates: SKM demands Commerce Minister Piyush Goyal's resignation for ignoring concerns of millions of farmers - The Hindu

The Hindu·8 Feb 2026

India to lower duties on all U.S. industrial goods, many agri products; secures various tariff commitments - The Hindu

The Hindu·8 Feb 2026

India-U.S. interim trade deal: ‘Namaste Trump scored over Howdy Modi’, says Congress - The Hindu

The Hindu·8 Feb 2026

India-U.S. trade deal in final stages, it will open up new phase in ties, says Jaishankar - The Hindu

The Hindu·8 Feb 2026

GKSolverToday's News