India and the US agree on a framework for an Interim Trade Agreement; US reciprocal tariff on Indian goods set at 18%
India and the United States announced a framework for an Interim Agreement on reciprocal trade in a joint statement released on 7 February 2026 (IST), which Prime Minister Narendra Modi welcomed the same day.
Summary
India and the United States announced in a joint statement, released by the Commerce Ministry on 7 February 2026, that they have reached a framework for an Interim Agreement on reciprocal and mutually beneficial trade. It reaffirms the broader India–US Bilateral Trade Agreement (BTA) negotiations launched by President Donald Trump and Prime Minister Narendra Modi on 13 February 2025. India will eliminate or reduce tariffs on all US industrial goods and many US food and farm products, including dried distillers' grains, red sorghum for animal feed, tree nuts, fruit, soybean oil, wine and spirits. The US will apply a reciprocal tariff of 18% on Indian goods such as textiles and apparel, leather and footwear, plastics, organic chemicals and home décor, and, once the Interim Agreement is concluded, remove it on goods such as generic pharmaceuticals, gems and diamonds and aircraft parts. The US will also remove Section 232 tariffs on certain Indian aircraft and parts, and India will get a preferential tariff-rate quota for auto parts. India intends to buy USD 500 billion of US energy, aircraft, precious metals, technology products and coking coal over five years. Both sides will address non-tariff barriers, including on US medical devices and ICT goods, and set rules of origin. PM Modi said the framework strengthens 'Make in India' and will create jobs for women and youth.
Key facts
- Announced
- Joint statement, 7 February 2026 (IST)
- Broader talks
- BTA launched 13 February 2025
- US tariff on Indian goods
- 18% reciprocal tariff; to be removed on generics, gems and diamonds, aircraft parts once the deal is concluded
- India's cuts
- All US industrial goods; DDGs, red sorghum, tree nuts, fruit, soybean oil, wine and spirits
- Purchases
- India intends to buy USD 500 billion of US goods over 5 years
- Other
- Section 232 relief on aircraft parts; auto-parts tariff-rate quota; rules of origin; non-tariff barriers
Practice MCQs 5 questions
Under the India–US framework for an Interim Trade Agreement announced on 7 February 2026, what reciprocal tariff will the US apply on originating goods of India?
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Correct answer: B — 18%
The US will apply a reciprocal tariff rate of 18% on originating goods of India.
How much in US goods does India intend to purchase over the next five years under the India–US framework of February 2026?
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Correct answer: D — USD 500 billion
India intends to purchase USD 500 billion of US energy products, aircraft and parts, precious metals, technology products and coking coal over the next five years.
The broader India–US Bilateral Trade Agreement (BTA) negotiations, reaffirmed by the February 2026 framework, were launched on:
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Correct answer: A — 13 February 2025
The BTA negotiations were launched by President Trump and PM Modi on 13 February 2025.
Consider the following about the India–US framework for an Interim Trade Agreement (February 2026): 1. India will eliminate or reduce tariffs on all US industrial goods. 2. Once the Interim Agreement is concluded, the US will remove the reciprocal tariff on goods such as generic pharmaceuticals, gems and diamonds, and aircraft parts. Which of the above is/are correct?
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Correct answer: C — Both 1 and 2
Both are correct as per the joint statement.
Consider the following about the India–US joint statement of February 2026: 1. India will receive a preferential tariff-rate quota for automotive parts. 2. India agreed to eliminate all tariffs on US dairy products. Which of the above is/are correct?
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Correct answer: A — 1 only
Only 1 is correct. The farm products listed for tariff cuts include DDGs, red sorghum, tree nuts, fruit, soybean oil, wine and spirits; dairy is not among them.