India-US Deal Shields Farmers

New Delhi will substantially reduce tariffs on industrial and agricultural goods while continuing to protect sensitive sectors.

Tariffs on some agricultural products that are not traditionally considered sensitive will be brought down to zero, while in the case of relatively sensitive items, duties will be reduced in a graded manner and quotas will be imposed.

IMAGE: Union Commerce Minister Piyush Goyal addresses the media on the India-US trade deal in New Delhi, February 3, 2026. Photograph: @PiyushGoyal X/ANI Video Grab

India has protected its sensitive agriculture and dairy sectors in the just-concluded trade deal with the US, Union Commerce and Industry Minister Piyush Goyal asserted on Tuesday.

Both sides, Goyal added, were working towards soon issuing a joint statement that would set out the details of the agreement.

India-US trade deal

"This is a deal that will make every Indian proud, that will protect the interests of every Indian, and provide huge opportunities for all the people of India," Goyal told reporters in New Delhi.

The agreement, he noted, will "protect the sensitive sectors, the interests of our agriculture and our dairy sectors in full respect".

Later, speaking to CNBC, United States Trade Representative Jamieson Greer said India, like every country in the world, including the US, has some protection around certain key areas.

"They will continue to control that, we will continue to work on access," he added.

Greer said the process of making the deal official is under way.

Zero tariffs on 98%-99% goods

Although US President Donald Trump said on Monday that India would reduce tariffs to 'zero', it's learnt that New Delhi will substantially reduce tariffs on industrial and agricultural goods while continuing to protect sensitive sectors.

India will, for instance, continue to withhold tariff concessions on products such as dairy, poultry, cereals, genetically modified food, soya meal, corn and maize.

The approach is in line with what New Delhi has offered to countries with which it has recently signed free trade agreements.

Similarly, in other sensitive areas such as automobiles and alcohol, India will follow a phased reduction approach.

"India's average industrial goods tariff is 13.5 per cent. That is going to be zero for 98-99 per cent of products.

'There is a vast array of agricultural goods that will go to zero, for a variety of things such as tree nuts, wines, spirits, fruits and vegetables etc. This is a big win,' Greer said.

Protection for agriculture & dairy

Goyal said the trade agreement would open up major opportunities for India's labour-intensive sectors, including textiles, plastics, apparel, home décor, leather and footwear, gems and jewellery, organic chemicals, rubber goods, machinery and aircraft components, as duties are set to be cut sharply to 18 per cent from 50 per cent.

These sectors together account for more than a third of India's exports to the US.

Boost for labour-intensive exports

The agreement comes more than five months after Washington imposed tariffs of up to 50 per cent on several Indian exports, including a 25 per cent punitive duty linked to India's purchases of Russian oil.

In the recently announced Budget for the 2026-2027 financial year, the government announced a series of Customs duty cuts and tax incentives for global cloud firms, measures that are expected to benefit American firms.

'We will maintain an 18 per cent tariff against India because we have this giant trade deficit with them, but they have also agreed to reduce their tariffs for us on a variety of agricultural products, manufactured goods, chemicals, medical devices etc.

It's an exciting opportunity for both countries,' said Greer.

Joint statement on Phase-1 deal

Goyal said both sides were working on a joint statement outlining the details of the first phase of the agreement.

"We will be shortly issuing a joint statement by both countries, along with the details, which we will be shortly inking between the United States of America and India.

"And as soon as the final understanding of the deal is inked and the joint statement is finalised, technical processes are completed, full details will be shared," he told reporters.

This will be followed by a legally binding text, with reduced tariffs expected to come into effect once the joint statement is finalised.

Greer said that on non-trade barriers there was an understanding around a process for India to accept US standards.

$500 billion US purchases plan

India intends to buy goods worth $500 billion from the US over the next five years, including oil and gas, aircraft and parts, precious metals and diamonds, and technology products such as high-end chips and server equipment.

The purchases are expected to include $20 billion worth of technology products used in setting up data centres.

The US is India's largest export destination.

In the 2024-2025 financial year, India exported goods worth $86.5 billion to the US, while importing goods worth $45.6 billion.

The steep 50 per cent tariff on 55 per cent of India's outbound shipments to the US had made Indian exports uncompetitive.

The reduction in duties is expected to bring India closer to parity with regional competitors such as Vietnam, Indonesia, Malaysia, Thailand, Cambodia and Bangladesh, which are also key rivals in labour-intensive sectors.

The timing of the deal is critical for several of these industries, as contracts had begun to come under pressure in the absence of relief from high tariffs.

Products such as steel, aluminium, copper, automobiles and auto parts will continue to attract additional tariffs of 25-50 per cent under Section 232 of US domestic law. Exporters said India was not at a significant disadvantage, as the additional tariffs under Section 232 are not country-specific.

What US Trade Representative Jamieson Greer said:

India's industrial goods tariffs on 98-99 per cent items will go to zero from 13.5 per cent
Tariffs to be eased to zero on tree nuts, wines, spirits, and certain fruits & vegetables
India has some protection around certain key areas
We've understanding on reducing India's technical non-tariff barriers
Monitoring India's winding down of Russia oil purchase

India-US trade deal lifts uncertainty, boosts manufacturing

Ruchika Chitravanshi

Kindly note that this illustration generated using ChatGPT has only been posted for representational purposes.

The India-US trade deal has lifted the veil of uncertainty on the country's economy and is expected to create more opportunities for India's labour-intensive and manufacturing sectors, top finance ministry officials said on Tuesday.

"Today is a good day.

"One of the dark clouds of uncertainty from the world economy has been lifted, with both Prime Minister Narendra Modi and US President Trump reaching a trade deal... Industry should now cheer up and heave a sigh of relief," Department of Financial Services Secretary M Nagaraju said at a Ficci event, adding it is a good deal that will benefit exporters.

'Let us await the details and that will help us see how it will happen'

Referring to the highly-anticipated India-US trade deal, Anuradha Thakur, department of economic affairs secretary, said a great deal of uncertainty had come down this morning.

Even though the Budget was prepared keeping in mind the situation that existed then, the government is looking forward to greater buoyancy, she added.

"The Budget math is transparent and we are committed to achieving the debt-to-GDP glide path," Thakur stressed.

Uncertainty lifted for economy

Revenue Secretary Arvind Shrivastava, in a statement, said that the trade deal will further expand and deepen trade between two of the largest economies of the world.

'It will create more opportunities for our labour-intensive and manufacturing sectors in the US market and give impetus to mutually-beneficial collaboration in high and advanced technology sectors,' he said.

Labour-intensive & manufacturing sectors

On the deal's impact on GDP growth, Thakur said, "I will wait for things to unfold.

"Very constructive dialogue has been going on, which has resulted in this development.

"Let us await the details and that will help us see how it will happen."

GDP growth outlook FY27

The Economic Survey has forecast a GDP growth rate in the range of 6.8 to 7.2 per cent in FY27 without factoring in the India-US trade deal.

"We all work in global systems which are interconnected. In that, India stands out as a macro-economically strong country in the world today.

"Going forward, we would like to continue with consistency and commitment on the path that was undertaken 10-12 years back," Thakur emphasised.

Debt-to-GDP glide path

The DEA secretary also said the combined disinvestment and asset monetisation goal of Rs 80,000 crore for FY27 is likely to be exceeded.

"This target cannot be singularly achieved with one thing. It is a mix of both disinvestment and asset monetisation.

"We are hopeful of exceeding the target," she said.

Given the momentum, there is likely to be an uptick on the receipts side.

Divestment & asset monetisation target

Nagaraju said the banking sector's credit growth was not adequate yet to meet the Viksit Bharat vision of 2047.

A high-level expert committee for the banking sector will and recommend measures to improve the sector and credit growth.

The government will set up the committee soon.

Key Points

Sensitive sectors protected: India will continue to shield agriculture and dairy, with no tariff concessions on items like dairy, poultry, cereals, GM food, soya, corn and maize.
Big tariff cuts coming: Industrial tariffs will drop to zero for 98–99% of products, while non-sensitive farm items also move to zero and others see phased cuts with quotas.
Major boost for exporters: Labour-intensive sectors (textiles, apparel, leather, gems & jewellery, machinery and components) get sharp duty cuts, helping over one-third of India’s exports to the US.
$500-billion purchase plan: India plans to buy about $500 billion worth of US goods over five years, including energy, aircraft, chips and data-centre equipment.
Deal to ease uncertainty: The trade pact is expected to lift economic uncertainty, support manufacturing, and deepen bilateral trade, with a joint statement and legal text coming next.

Feature Presentation: Ashish Narsale/Rediff