US-India Trade Deal: Pharma, auto and aviation sectors will get new momentum

The framework for an Interim Trade Agreement (ITA) between India and the United States has been finalized. This agreement will provide India with improved access to the US market in several sectors. 

This agreement also paves the way for further negotiations on a larger bilateral trade agreement between the two countries, which was initiated earlier this year by President Donald Trump and Prime Minister Narendra Modi. This framework focuses on reciprocal and balanced trade, delivering tangible benefits to both countries and strengthening supply chains.

Tariff relief plan for Indian exports

Under the framework, the US will impose an 18% reciprocal tariff on Indian goods. However, after the interim agreement is completed, the US has promised to remove these tariffs on several Indian products, including generic medicines, diamonds and jewelry, and aircraft parts. This will significantly benefit Indian exporters in sectors where India is already strong.

Better opportunity for aircraft and auto parts

The US will remove tariffs on certain aircraft and aircraft parts imported from India, which were previously imposed on aluminum, steel, and copper in the name of national security. 

Furthermore, India will receive special tariff quotas on auto parts. This will give Indian auto parts companies an advantage over other countries in the US market.

Medicines were also included

Indian generic medicines and pharmaceutical ingredients are also included in this agreement. However, this will depend on the results of a US investigation (Section 232). This will ensure Indian pharmaceutical companies' continued access to the US market.

Special access to other sectors as well

The two countries have agreed to provide each other with continued special market access in preferred sectors. Furthermore, rules of origin will be established so that benefits accrue only to India and the United States.

Relaxation of standards and regulations

To facilitate trade, both countries will discuss standards and inspection procedures in some sectors, so that the problems of Indian exporters are reduced.

Scope for further tariff cuts

In the upcoming major trade agreement, America will also consider reducing tariffs further on India's demand.

Focus on technology and supply chain

The agreement places special emphasis on technology, products such as data centers and GPUs, and strengthening supply chains. Both countries will now work towards quickly implementing this framework and finalizing a larger trade agreement.