Prime Minister Narendra Modi on Saturday formally announced a landmark breakthrough in India-US economic relations hailing the establishment of a framework for an Interim Trade Agreement.
The announcement, made via social media, signals a significant strategic pivot that is expected to de-escalate recent tariff tensions and open a $30 trillion market for Indian exporters.
The prime minister emphasised the personal role played by US President Donald Trump in bridging the diplomatic divide that had seen tariffs on Indian goods climb as high as 50% in the preceding year.
"Great news for India and USA! We have agreed on a framework for an Interim Trade Agreement between our two great nations. I thank President Trump for his personal commitment to robust ties between our countries," Prime Minister Modi said.
A reciprocal economic reset
The newly minted framework serves as a precursor to a more comprehensive Bilateral Trade Agreement (BTA). Under the terms of the interim pact, the United States has agreed to slash reciprocal tariffs on Indian exports to 18%. This reduction is particularly vital as it rescinds the 25% "punitive" levy previously imposed over India's energy trade with Russia—a move tied to India's recent commitment to shift oil imports toward US and Venezuelan sources.
In return, India has committed to a massive $500 billion procurement plan over the next five years, covering US energy products, aircraft and high-end technology, including Graphics Processing Units (GPUs) essential for AI infrastructure.
Prime Minister Modi highlighted the grassroots impact of these negotiations.
"This framework reflects the growing depth, trust and dynamism of our partnership. It strengthens ‘Make in India’ by opening new opportunities for India’s hardworking farmers, entrepreneurs, MSMEs, StartUp innovators, fishermen and more. It will generate large-scale employment for women and youngsters," he said.
Innovation and supply chain resilience
Beyond immediate commodity trading, the agreement focusses heavily on emerging technologies and the stabilisation of global logistics. Both nations have pledged to align their economic security to counter non-market policies from third parties and to streamline digital trade rules.
"India and the United States share a commitment to promoting innovation and this framework will further deepen investment and technology partnerships between us. This framework will also strengthen resilient and trusted supply chains and contribute to global growth," the prime minister said.
Road to ‘Viksit Bharat’
For New Delhi, the deal is a cornerstone of the broader national objective to achieve developed nation status. By securing preferential market access for sectors like textiles, leather and generic pharmaceuticals, the government aims to fuel a sustained export-led growth model.
The prime minister concluded his message with a vision of a future-proofed alliance.
"As India moves forward towards building a Viksit Bharat, we remain committed to building global partnerships that are future-oriented, empower our people and contribute to shared prosperity," Prime Minister Modi said.
With the framework now public, Commerce Minister Piyush Goyal has indicated that a formal signing of the legal agreement is expected by March 2026, marking a new era in the "indispensable partnership" between the world’s two largest democracies.
