India and the United States have announced the finalisation of the framework for an interim agreement, which is a precursor to a trade deal, that signals a partial reset in bilateral commercial ties. The immediate headline is the rollback of a 25 per cent penal levy imposed last year, with US duties on Indian exports set to fall further to 18 per cent in the coming week. For Indian exporters, this is meaningful relief.
The commercial upside is clear on the export side. Labour-intensive sectors including textiles, apparel, leather, footwear and plastics will regain competitiveness in the US market. At an 18 per cent tariff, Indian goods are now better placed than their regional competitors. It is equally important to keep the gains in perspective. Nearly 40 per cent of India’s exports to the US, including pharmaceuticals and electronics, already entered duty-free. The agreement expands the zero-duty basket, taking such exports to roughly $44 billion, but it does not represent a wholesale opening of the US market so much as a selective recalibration. Of course, the 25 per cent penal Russian oil duty is gone now, which is a matter of relief. On the import side, India’s own concessions are wider and less precisely defined. New Delhi has agreed to eliminate or reduce duties on almost all industrial goods and has pledged to purchase $500 billion worth of US energy, aircraft and aircraft parts, technology, precious metals and coking coal over the next five years. How India will scale up its imports to $500 billion remains unclear considering that annual imports are less than $50 billion.
These moves reflect a pragmatic willingness to trade access for access. In agriculture, while the government maintains that sensitive products and the dairy sector remain protected, Commerce Minister Piyush Goyal’s reference to unspecified “additional products” leaves room for interpretation. The touted benefits of cheaper imports of distillers’ dried grains with solubles mask a deeper issue: DDGS is derived from genetically modified corn. Its entry would amount to a backdoor opening in a sector India has long handled with care. Also, the joint statement says India has agreed to remove non-tariff barriers on agriculture whereas there is no such commitment from the US.
The more serious concern, however, lies beyond trade. The government has reiterated that India’s oil import policy is guided by national interest. Yet, the US executive order is clear that the rollback of the 25 per cent penal levy is contingent on India’s commitment to stop buying Russian oil, with explicit provisions for reinstating the duties if that commitment is breached. This is not merely conditional trade policy; it is an attempt to dictate terms on a core strategic choice. Tariff relief tied to compliance on energy sourcing sets an undesirable precedent. There is still room to recalibrate before the legal text is signed. India should use that window to tighten language, close ambiguities, especially in agriculture, and reaffirm that trade agreements cannot dictate strategic choices on energy security. Engagement with Washington is important but strategic autonomy is indispensable.
Published on February 8, 2026