India has secured a major breakthrough in global trade with the signing of the India-U.S. Bilateral Trade Agreement, unlocking preferential access for Indian exports to the United States’ massive $30-trillion market. The agreement delivers sweeping tariff reductions, zero-duty access across key sectors, and enhanced cooperation in digital trade, technology and healthcare – while carefully safeguarding India’s farmers, MSMEs and sensitive industries.
With India’s exports to the U.S. standing at $86.35 billion in 2024, the deal significantly strengthens India’s competitiveness in sectors such as textiles, leather, gems and jewellery, agriculture, machinery, pharmaceuticals, home decor and technology-driven industries.
Massive Tariff Relief for Indian Exports
A central pillar of the agreement is the sharp rollback of reciprocal tariffs, which earlier went as high as 50% on many Indian products.
Of the $40.96 billion of exports previously subject to reciprocal tariffs $30.94 billion will now face a reduced tariff of 18%; and $10.03 billion will receive zero-duty access. An additional $1.04 billion of exports fall under an exemption category with no additional duty. Under Section 232 (end-use basis), $28.30 billion worth of exports will face zero additional duty, down from earlier levies of up to 50%.
Overall, India gains 18% tariff access on $900 billion worth of U.S. global imports; zero duty on $150 billion worth of imports; no additional duty on $720 billion worth of imports; continued exemption on $350 billion worth of imports; and preferential treatment under 232 tariffs.
Competitive Edge Over Global Rivals
The agreement creates a strong tariff differential in India’s favour. While Indian products enjoy lower duties, competing exporters continue to face higher tariffs in the U.S., including China (35%); Vietnam and Bangladesh (20%); and Malaysia, Indonesia, Philippines, Cambodia and Thailand (19%).
This significantly boosts India’s price competitiveness across labour-intensive and manufacturing sectors.
Sector-Wise Gains
Textiles & Apparel
* Tariffs cut from 50% to 18%
* Silk receives 0% duty access
* U.S. market size: $113 billion
* Beneficiaries include garments, carpets, cotton and man-made textiles, bed linen, curtains, yarn and baby clothing
Leather & Footwear
* Tariffs reduced to 18% from 50%
* U.S. market size: $42 billion
* Boost for finished leather, footwear and components, supporting MSMEs and job creation
Gems & Jewellery
* Tariffs cut to 18%
* Zero duty for diamonds, platinum and coins
* Market access covers $61 billion, including $29 billion under zero-duty categories
Home Decor
* Tariffs reduced to 18%
* U.S. market size: $52 billion
* Additional 0% duty access for $13 billion worth of products including chandeliers and illuminated signs
Toys
* Tariffs slashed to 18%
* U.S. market size: $18 billion
* Opens scaling opportunities for Indian MSME manufacturers
Machinery & Parts
* Tariffs reduced from 50% to 18%
* U.S. market size: $477 billion
* India’s current exports: $2.35 billion
* Supports India’s manufacturing and industrial export ambitions
Agriculture: Export Growth With Strong Safeguards
India maintains an agricultural trade surplus of $1.3 billion with the U.S.
* $1.36 billion of Indian agricultural exports receive zero additional duty
* Products include spices, tea, coffee, fruits, nuts, cereals, processed foods and oils
* $1.035 billion assured zero reciprocal tariff for predictability
Highly sensitive sectors – dairy, meat, poultry, cereals, pulses, millets, oilseeds, GM foods and tobacco – remain fully protected. Select products are liberalised through tariff-rate quotas, phased reductions (up to 10 years), or minimum import price mechanisms.
Zero-Duty Access for $38 Billion in Industrial Exports
Zero-duty access applies to industrial exports worth $38 billion, including aircraft parts; pharmaceuticals and APIs; auto components; and gems, watches, chemicals, plastics, paper, wood and rubber products.
Digital Trade, Semiconductors and Technology Cooperation
The agreement strengthens India’s digital ecosystem by ensuring access to advanced semiconductors and AI chips; data-centre infrastructure; cloud computing hardware; and ICT and cybersecurity equipment.
India ranks 5th globally in digital services exports, with $280 billion in digitally delivered services exports in 2024. A structured digital trade framework with the U.S. is expected to reduce compliance costs, boost SME participation and attract greater U.S. investment in AI, fintech, health-tech and cloud services.
Healthcare and Medical Infrastructure
Improved access to high-end diagnostic and surgical equipment will strengthen India’s healthcare ecosystem, improving affordability and patient outcomes.
Strategic, Balanced and Future-Ready Partnership
The India-U.S. Bilateral Trade Agreement represents a transformative leap in economic ties, combining market access, tariff rationalisation, digital cooperation and technology sharing, while preserving India’s strategic and domestic interests.
By balancing growth with protection and competitiveness with resilience, the agreement positions India for sustained export-led growth, deeper global integration and long-term economic strength.
