India-US trade deal: Tariffs on Indian labor-intensive goods will be cut

In a major relief to Indian exporters, the US through an executive order on Friday halved tariffs on the country’s labor-intensive goods, including textiles, leather, footwear and plastics, from 50 percent to 25 percent. A further drop to 18 percent has been agreed by Washington and is expected through a new order next week.

However, the rollback of these 25 percent ad valorem tariffs on Indian goods, effective February 7, 2026, is explicitly linked to India’s ‘commitment’ to stop purchasing Russian oil. In the order, US President Donald Trump warned that the duties could be reimposed if imports resume.

Commerce and Industry Minister Piyush Goyal dodged a question on the US claim on India’s commitment to stop purchases of Russian oil, while the Ministry of External Affairs reiterated its earlier position. It said ensuring the safety of 1.4 billion Indians was the government’s top priority and emphasis was on diversifying energy sources.

In a gesture of goodwill, India agreed to eliminate tariffs on the iconic American motorcycle, Harley-Davidson – a long-standing demand of Trump, an official said.

It also committed to eliminating/reducing tariffs on almost all US industrial goods and a range of agricultural products, according to the joint statement on the framework of the interim trade deal shared by both sides on Saturday.

India plans to buy $500 billion worth of US energy products, aircraft and aircraft parts, precious metals, technology products and coking coal over the next five years, the statement said.

New Delhi has protected all its red lines and there will be no market access for sensitive agricultural products, and the entire dairy sector, Commerce and Industry Minister Piyush Goyal told the media on Saturday.

“India’s farmers and MSMEs will not be harmed by the pact…the two countries have reached a very fair, just and balanced agreement,” Goyal said.

Some of the US items that will become cheaper in India as a result of duty cuts include automobiles (excluding electric cars), cosmetics, life-saving medicines, medical equipment, wine and alcohol (with quotas), certain fruits and vegetables, soybean oil and certain livestock feed.

The US has also agreed as part of the pact to eliminate and reduce tariffs on a number of products. “About $44 billion of Indian exports will go to zero tariff (to the US),” Goyal pointed out.

These duty cuts will be implemented once the interim trade deal is finalized, hopefully sometime in March, Indian officials said.

Of India’s exports to the US worth $86.5 billion in FY26, labor-intensive goods worth around $30-32 billion will now be subject to a tariff of 18 percent (including goods from the labor-intensive sectors), while there will be no change in duties on goods worth $12 billion where the US imposed duties on national security grounds (including steel, copper and certain auto parts).

The two sides will immediately implement the framework and work towards finalizing the interim trade agreement with a view to concluding a mutually beneficial BTA in line with the agreed roadmap, the joint statement said.

Washington also set the stage for gaining greater market access in food and agriculture in the future. “India recognizes the importance of working together to resolve long-standing concerns and also agrees to address long-standing non-tariff barriers to trade in U.S. food and agricultural products,” the statement affirmed.

Published on February 7, 2026