India and the United States formalised a landmark interim trade framework, signaling a self-confident nation’s deeper integration into the global economy.
This deal, alongside a comprehensive Free Trade Agreement (FTA) with the European Union, marks a historic pivot from protectionism. Prime Minister Narendra Modi heralded the agreements as proof of India’s status as a trusted partner, potentially unlocking a $30 trillion market for Indian exporters. The US pact includes a $500 billion procurement pledge over five years, spearheaded by a massive $80 billion order for 220 Boeing aircraft, while the EU deal slashes luxury car tariffs from 110% to 10% for a quota of 250,000 vehicles annually.
Unyielding sovereignty amidst global pressure
While several Gulf countries have moved toward zero-tariff regimes on American agricultural imports to appease the Trump administration, the Modi government refused to sway on core issues of food security. Despite the US previously imposing 50% punitive tariffs on Indian jewellery and textiles, New Delhi negotiated a phased reduction. India agreed to lower its Russian crude imports, which fell from 1.8 million barrels per day in November to 1.1 million in January 2026, only after securing a rollback of American duties to a reciprocal 18%. This unyielding stance ensured that the livelihoods of over 150 million Indian dairy farmers remained protected from a flood of subsidised foreign produce. Even after having certain benefits, Indian farmer unions and opposition parties have called for nationwide protests against the new India-US trade deal, fearing that lowered import barriers will allow subsidised American agricultural products to devastate the livelihoods of domestic producers.
Bangladesh’s zero-tariff access
Bangladesh also signed a trade deal with Washington that grants zero-tariff access for apparel manufactured using American cotton, alongside a reduced 19% reciprocal rate. This strategic move instantly neutralised India's recent 18% tariff advantage, causing major Indian textile stocks to plunge by 5% as investors feared a total loss of competitive pricing in the $118 billion US market.
Major takeaways
The twin deals bring transformative benefits; Indian farmers now gain zero-duty access to the US for spices, tea, and mangoes, an export market valued at $2.5 billion annually. Crucially, the US removed the 25% penal duty on Indian textiles and steel. For the industrial sector, India will reduce high duties on EU chemicals and cosmetics, currently averaging 16%, over a 10-year transition period. Additionally, by removing the 2% Digital Services Tax, India secured robust digital trade rules, positioning the nation to achieve its $2 trillion export target by 2030 and its Viksit Bharat goal by 2047.
