India is set to secure zero-duty access for goods worth around $44 billion under the first phase of a new bilateral trade agreement with the United States, marking a significant expansion of market access for Indian exporters. Commerce and industry minister Piyush Goyal said the initial tranche of the pact would cover nearly half of India’s merchandise exports to the US and described it as a carefully calibrated opening that boosts trade without compromising sensitive domestic interests.
Speaking at a press conference on Saturday, Goyal said the agreement had been structured to protect politically and economically critical sectors, particularly agriculture and dairy. He stressed that India had negotiated detailed exemption lines for products such as dairy items, lentils, cereals and millets, fruits, honey, flowers, meat products, ethanol for fuel blending and genetically modified foods. According to the minister, these safeguards ensure that farmers’ interests remain fully protected even as overall trade liberalisation advances.
Under the joint statement issued by New Delhi and Washington and a subsequent executive order from the US president, the United States has removed an additional 25% punitive duty on Indian goods with immediate effect. A reciprocal tariff rate of 18% is expected to replace the earlier 25% levy, though Goyal said this would require a fresh US administrative order, likely to be issued in the coming days. Sector-specific tariffs imposed under Section 232, including 50% duties on steel, aluminium and copper, will continue to apply globally.
Once legally concluded, the deal is expected to grant zero-duty access in the US market for a wide range of Indian products, including aircraft parts, machinery components, pharmaceuticals, basic auto parts, gems and diamonds. Smartphones will continue to enjoy zero-duty treatment, while most electronic goods will remain exempt under existing most-favoured-nation rules. Labour-intensive sectors such as textiles, leather, toys, sports goods and silk products are also expected to gain from lower tariffs, improving India’s competitiveness against regional rivals.
On the US side, several products will gain improved access to the Indian market, including Harley-Davidson motorcycles, which already saw import duties reduced in the latest Budget. Limited quotas have been allocated for certain US agricultural products such as tree nuts and apples, though Goyal said there was no cause for concern for Indian growers. He added that genetically modified distillers’ dried grains with solubles would be permitted only after processing removes modified characteristics.
The agreement remains open-ended, with further negotiations expected to add or revise product coverage as talks progress. Goyal said this was only the first tranche of a broader bilateral framework aimed at deepening trade ties and strengthening supply chains. He highlighted expanded cooperation in advanced technologies such as semiconductors, AI chips, data centres, aircraft and quantum technologies, calling them critical to India’s long-term industrial and national security goals.
India has also committed to scaling up bilateral trade to $500 billion over the next five years and to significantly increase purchases of US energy products, aircraft, technology goods, precious metals and coking coal. Officials say the pact will help India move away from restrictive authorisation regimes for critical technology imports while maintaining balance across sectors, including MSMEs, handicrafts and handlooms.
Trade experts offered mixed assessments of the deal. Some analysts cautioned that while India gains meaningful tariff relief, many permanent concessions flow in favour of US exports, with Washington largely rolling back previously imposed duties rather than cutting baseline tariffs. Others said India had secured preferential treatment for key sectors such as textiles and pharmaceuticals while making selective concessions in agriculture and non-tariff barriers.
Official data show that India’s merchandise exports to the US rose to $86.5 billion in the last financial year, while imports reached $45.6 billion, taking total bilateral trade above $132 billion. Exports continued to grow even amid high tariffs, underlining the potential impact of duty reductions. Goyal described the agreement as a win-win outcome, saying exporters, manufacturers and consumers on both sides stand to benefit as India and the US deepen what he called a natural partnership built on scale, stability and mutual trust.
