Editor’s Note
This article discusses the potential boost for key Indian export sectors following U.S. tariff reductions under an interim trade pact. The focus is on labour-intensive industries like apparel, footwear, and chemicals.
India’s exports from labour-intensive sectors such as apparel, footwear, plastics, rubber, organic chemicals and home decor will get a major fillip in the US market following a reduction in tariffs by the US under the interim trade pact.
The duties will be cut down on Indian goods including textile and apparel, leather and footwear, plastic and rubber, organic chemicals, home decor, artisanal products, and certain machinery.
The United States will apply a reciprocal tariff rate of 18 percent under Executive Order 14257 of April 2, 2025 (Regulating Imports With a Reciprocal Tariff to Rectify Trade Practices That Contribute to Large and Persistent Annual United States Goods Trade Deficits), as amended, on originating goods of India, including textile and apparel, leather and footwear, plastic and rubber, organic chemicals, home décor, artisanal products, and certain machinery, and, 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 Annex to Executive Order 14346 of September 5, 2025 (Modifying the Scope of Reciprocal Tariffs and Establishing Procedures for Implementing Trade and Security Agreements), as amended, including generic pharmaceuticals, gems and diamonds, and aircraft parts.
Lower tariffs are expected to support exports from India’s labour-intensive industries, including textiles and garments, leather and footwear, plastic and rubber products, organic chemicals, home décor items, handicrafts, and select machinery segments.
As part of this framework, the US will slash reciprocal tariffs on Indian goods to 18%, providing a huge market opportunity in key sectors such as textiles & apparel, leather & footwear, plastic & rubber products, organic chemicals, home décor, artisanal products, and select machinery in the world’s largest economy.
India-US trade deal Live Updates: With the US reducing tariffs on Indian goods, labour-intensive Indian sectors such as textiles and apparel, leather and footwear, plastics and rubber, organic chemicals, home décor, handicrafts and certain machinery segments are expected to benefit.
India-US trade deal Live Updates: Days after US President Donald Trump and Prime Minister Narendra Modi announced the much-awaited India-US trade deal, both countries have issued a joint statement detailing the top points and key highlights of the India-US trade agreement. The India-US deal is expected to be signed in the next few weeks, according to Commerce Minister Piyush Goyal. As per the joint statement, tariffs on Indian exports to the US have been reduced to 18%, and a host of sectors are expected to benefit. Trump has also signed an executive order to remove the 25% penal tariffs on India for its purchase of crude oil from Russia.
According to the statement, India will open access to some US agricultural products, though according to the government sensitive dairy and agricultural products have been kept safeguarded.
Home Minister Amit Shah said on Saturday that the interim trade agreement between India and the US gives “another boost to India’s roaring growth engine”.
In a post on X, Shah said, “Heartiest gratitude to Modi Ji for the landmark deal, and congratulations to every citizen of India,” he added.
India and the United States announced on Saturday that they have finalised the framework for the first phase of the bilateral trade agreement under which both sides will reduce import duties on a number of goods to boost the two-way trade.
The framework reaffirms the two countries’ commitment to the broader US-India Bilateral Trade Agreement (BTA) negotiations, launched by President Donald Trump and Prime Minister Narendra Modi on February 13, 2025, according to a joint statement.
While the US will reduce tariffs on Indian goods to 18 per cent from the present 50 per cent, India will eliminate or cut down import duties on all American industrial goods and on a wide range of food and agricultural products, including dried distillers’ grains, red sorghum for animal feed, tree nuts, fresh and processed fruit, soybean oil, wine and spirits.
The opposition further mocked the government by invoking the well-known Mukesh song “Dost dost na raha” from the 1964 film Sangam.
Farmer outfits slam India-US trade deal, call for large-scale protests on Feb 12.