Washington/New Delhi: India and the US announced on Saturday that they have agreed on a framework for an interim trade agreement, under which the tax imposed on New Delhi will be reduced to 18 percent. According to the agreement, India will eliminate or reduce taxes on all American industrial goods and a wide range of American food and agricultural products, including dry distillers grains, red sorghum for animal feed, tree nuts, fresh and processed fruits, soybean oil, wines and spirits and other products.
A joint statement issued by the two countries said, "The United States and India are pleased to announce that they have reached a framework for an interim agreement on mutual and beneficial trade."
The statement further said that the framework will be signed on February 13, 2025 by President Donald J. Reiterates the commitment of the countries to the comprehensive US-India Bilateral Trade Agreement (BTA) negotiations initiated by Trump and Prime Minister Narendra Modi.
As per the key terms of the agreement, the US will reduce import duty on Indian goods to 18 per cent. It is worth noting that in August last year, the US had imposed a 25 per cent reciprocal duty and a 25 per cent additional levy on India due to its purchase of Russian oil. The 50 per cent duty had hit Indian exporters hard. This tax cut will give a boost to India's exports in sectors such as textiles, leather, plastics, rubber, organic chemicals and artefacts.
Upon successful completion of the interim agreement, duties on goods including generic medicines, gems and diamonds, and aircraft components will become zero, further strengthening the 'Make in India' campaign. India intends to buy US energy products, aircraft, precious metals and technology products worth $500 billion in the next five years.
The two countries will significantly increase trade in technology products, such as graphics processing units, and have also agreed to increase economic security coordination to strengthen supply chains.