India-US Trade: Zero-Duty Access on $44 Billion Exports

India has moved a step closer to reshaping its trade engagement with Washington through the India–US Trade Agreement Phase 1, a framework that promises zero-duty access for goods worth nearly $44 billion — almost half of India’s merchandise exports to the United States. Commerce and Industry Minister Piyush Goyal described the pact as a carefully structured opening that expands export opportunities without compromising the country’s sensitive domestic sectors.

Speaking at a detailed press briefing, Goyal emphasised that the agreement balances ambition with caution. According to him, the first tranche reflects months of negotiations aimed at strengthening market access for Indian industries while shielding farmers, dairy producers and small manufacturers from sudden import pressures.

India-US Trade: Export Gains Paired With Domestic Safeguards

Under the India–US Bilateral Trade Agreement Phase 1, India has secured exemption lines for several agricultural and food products considered crucial to rural livelihoods. These include dairy goods, soyameal, lentils, cereals and millets such as jowar and bajra, fruits including bananas and strawberries, honey, green peas, flowers, meat products and ethanol used in fuel blending. The framework also maintains a cautious approach toward genetically modified food imports.

Goyal reiterated that these exemptions demonstrate the government’s commitment to protecting farmers’ interests. He added that sensitive sectors would remain insulated even as export-driven industries gain from improved market access.

Tariff Changes Signal New Momentum

The United States has already withdrawn an additional 25 percent punitive duty on Indian goods with immediate effect. A reciprocal tariff reduction from 25 percent to 18 percent is expected to follow once the US administration issues a fresh executive order.

Despite these concessions, sector-specific tariffs under Section 232 will continue for steel, aluminium and copper at 50 percent — a measure applied globally rather than exclusively to India. In the auto components segment, half of the import volume will see the elimination of the existing 25 percent tariff, while the remaining portion will continue under the current duty structure.

Meanwhile, the US will gain zero-duty access for certain products, including Harley-Davidson motorcycles, reflecting India’s reciprocal approach and previous tariff reductions announced in the national budget.

India-US Trade: Key Indian Sectors Set to Benefit

Once legally finalised, the India–US Bilateral Trade Agreement Phase 1 will allow several Indian exports to enter the American market duty-free. These include aircraft parts, machinery components, generic medicines, pharmaceutical products, basic auto parts and gems and diamonds. Smartphones will continue to enjoy zero-duty access, while many electronic goods remain covered under the most-favoured-nation regime with minimal tariffs.

Goyal pointed out that improved global access has already triggered growth in certain industries, citing a recent surge in seafood exports after enhanced entry into European markets.

US Agricultural Imports and Technology Access

The agreement also outlines quotas for select US agricultural products, including tree nuts and apples, which the minister said would not harm domestic growers. He noted that many of these imports have been in place for years, indicating continuity rather than sudden policy shifts.

Beyond agriculture, the deal is expected to facilitate access to advanced technologies — including AI chips, semiconductors, high-end machinery, data centres, aircraft and quantum technologies.

Goyal emphasised that opening markets for information and communication technology goods is a strategic move, enabling Indian businesses to access cutting-edge tools at competitive prices and accelerate technological advancement.

Impact on MSMEs, Digital Trade and Precious Metals

The minister reassured stakeholders that micro, small and medium enterprises, as well as handicrafts and handloom sectors, would not face adverse effects from the agreement. Digital trade provisions, he added, avoid discriminatory barriers and provide a mechanism for bilateral consultations to resolve emerging concerns.

Gold and platinum importers are expected to benefit from improved access terms, while wine and spirits negotiations aim to achieve a balanced trade outcome that considers both consumer demand and domestic industry protection.

Open-Ended Agreement With Long-Term Ambitions

Goyal described the agreement as the first stage of a broader effort to deepen bilateral ties. India has committed to expanding total trade with the United States to $500 billion within five years. The plan includes increased purchases of US energy products, aircraft and aircraft components, technology goods, precious metals and coking coal, alongside expanded cooperation in advanced technology sectors such as data-centre graphics processing units.