In a significant development in bilateral ties and adding to the domestic troubles for PM Modi, the United States and India unveiled a framework for an Interim Trade Agreement on February 6, 2026, alongside a US executive order lifting punitive tariffs on Indian goods.

Issued by the Press Information Bureau in Delhi and the White House, these announcements signal progress towards a broader Bilateral Trade Agreement (BTA) launched by President Donald J Trump and Prime Minister Narendra Modi in February 2025. Yet, while heralding mutual benefits, the deal leaves key details unresolved, fuelling uncertainty amid domestic political critiques.

The joint statement outlines reciprocal tariff reductions to foster balanced trade and resilient supply chains. India commits to eliminating or slashing duties on all US industrial goods and a broad array of food and agricultural products. These include dried distillers’ grains (DDGs), red sorghum for animal feed, tree nuts, fresh and processed fruits, soybean oil, wine, spirits, and more. In return, the US will impose an 18 per cent reciprocal tariff—under Executive Order 14257 of April 2025—on select Indian exports such as textiles, apparel, leather, footwear, plastics, rubber, organic chemicals, home décor, artisanal products, and certain machinery.

Subject to the deal’s successful finalisation, the US pledges to lift these tariffs on additional Indian goods listed in the Potential Tariff Adjustments Annex to Executive Order 14346. This covers generic pharmaceuticals, gems, diamonds, and aircraft parts. Further concessions include removing US national security tariffs—imposed via Proclamations 9704, 9705, and 10962–on Indian aircraft and parts related to aluminium, steel, and copper imports.

India gains a preferential tariff rate quota for automotive parts under Proclamation 9888, with negotiated outcomes possible for pharmaceuticals pending a Section 232 investigation.

Beyond tariffs, the framework addresses non-tariff barriers. India agrees to ease restrictions on US medical devices, scrap import licensing delays for information and communication technology (ICT) goods, and evaluate US or international standards for exports within six months. Both nations will harmonise standards and conformity assessments, establish rules of origin to ensure benefits accrue mainly to them, and commit to preferential market access in key sectors. They also pledge to tackle digital trade barriers and advance BTA negotiations, with the US considering India’s plea for lower duties on its exports.

A standout commitment sees India pledging $500 billion in purchases of US energy products, aircraft, precious metals, technology—including graphics processing units (GPUs) for data centres—and coking coal over five years. This aims to bolster supply chain resilience, counter non-market policies of third parties, and enhance cooperation on investments and export controls.

Prime Minister Modi hailed the framework as “great news,” emphasising its boost to ‘Make in India’, job creation for farmers, MSMEs, startups, women, and youth, and deeper innovation ties. “This strengthens resilient supply chains and contributes to global growth as we build Viksit Bharat,” he stated.

Complementing the statement, President Trump’s executive order of February 6, 2026 modifies duties targeting threats from Russia. It revokes a 25 per cent ad valorem duty on Indian imports—imposed via Executive Order 14329 in August 2025—due to India’s past indirect purchases of Russian oil amid the Ukraine conflict. Citing India’s pledges to halt such imports, buy US energy, and expand defence ties, the order terminates these penalties effective 12:01 a.m. EST on February 7. It mandates monitoring by the Secretary of Commerce; resumption of Russian oil imports could trigger reimposition.

However, optimism is tempered by ambiguities. The joint statement lacks a timeline for finalisation, and contingent clauses—such as tariff reversals if commitments falter—introduce risks. India’s exports still face the 18 per cent tariff initially, higher than some prior rates, while services like IT remain unaddressed. Congress leader Jairam Ramesh lambasted the deal as opaque and detrimental. “India slashes duties for American farmers at our farmers’ expense; annual imports from the US will triple, erasing our trade surplus,” he posted. He highlighted the oil import ban’s enforcement threat, persistent export uncertainties, and quipped that “Namaste Trump” trumps “Howdy Modi” in photo-ops over substance.