New Delhi: India will extend quota-based duty concessions in the automobile sector and offer market access to alcoholic beverages through tariff reductions and minimum import price-based formulations under its trade pact with the United States, the government said on Monday.
Under the agreement, tariffs on Indian exports worth $30.94 billion to the US will be reduced from 50 per cent to 18 per cent, while reciprocal tariffs on another $10.03 billion of exports will be eliminated. This will allow a substantial share of Indian goods to enter the US market at significantly lower or zero duty, enhancing their price competitiveness. In addition, agricultural exports worth $1.36 billion will receive zero additional US duty.
The government said sensitive sectors such as automobiles have been liberalised through a combination of quota and duty-reduction mechanisms.
An official clarified that no duty concessions have been granted on electric vehicles. Medical devices will be covered under long and staggered phasing schedules, while precious metals and other sensitive industrial products will see tariff reductions through quota-based mechanisms. “Alcoholic beverages have been offered under tariff reduction along with minimum import price-based formulations, consistent with India’s approach in other free trade agreements,” the government said.
Tariffs on textile exports will be cut from 50 per cent to 18 per cent, while silk will receive zero-duty access, opening opportunities in a US market estimated at $113 billion. Similarly, tariffs for the gems and jewellery sector will be reduced to 18 per cent, providing preferential access to a $61 billion American market.
In addition, zero-duty market access has been secured for major product categories such as diamonds, platinum and coins, covering a $29 billion market. Export segments expected to benefit include cut and polished diamonds, lab-grown synthetic diamonds, coloured gemstones, synthetic stones, and articles of gold, silver and platinum.
AGRI SECTOR:
India maintains a trade surplus of $1.3 billion in agricultural trade with the US, with exports of $3.4 billion and imports of $2.1 billion in 2024. The US will apply zero additional duty on Indian agricultural exports worth $1.36 billion. Beneficiary products include spices; tea and coffee; copra and coconut oil; nuts such as cashew nuts and chestnuts; fruits including avocados, bananas, guavas, mangoes, kiwis, papayas, pineapples and mushrooms; cereals such as barley and canary seeds; bakery products; cocoa and cocoa preparations; sesame and poppy seeds; and processed items such as fruit pulp, juices and jams.
Agricultural market access has been structured based on product sensitivity, in line with India’s approach in previous trade agreements. The offer includes immediate duty elimination, phased elimination of tariffs over up to 10 years, tariff reduction, margin of preference and tariff rate quota (TRQ) mechanisms.
Highly sensitive sectors remain fully protected under exemptions, including meat, poultry and dairy products, genetically modified foods, soyameal, maize and certain cereals. For select sensitive products, tariff reductions have been applied to retain a measured level of protection. These include parts of plants, olives, pyrethrum and oil cakes.
Certain highly sensitive items have been liberalised under TRQs, allowing limited quantities at reduced duties. These include in-shell almonds, walnuts, pistachios and lentils. Phased tariff elimination of up to ten years has been adopted for some intermediate products used by India’s food processing industry, such as albumins, coconut oil, castor oil, cottonseed oil, and plants and parts of plants. Immediate duty elimination applies only to select non-sensitive products already liberalised under other FTAs.
INDUSTRIAL GOODS:
The agreement secures zero additional duty access for Indian industrial exports valued at $38 billion. India will face zero reciprocal duty in major categories including gems and diamonds, platinum and coins, clocks and watches, essential oils, inorganic chemicals, articles of paper, plastics and wood, and natural rubber.
Market access for American industrial goods has been structured strictly on product sensitivity, combining immediate tariff elimination, phased reductions of up to ten years and quota-based access.
DIGITAL TRADE:
India’s digitally delivered services exports touched $0.28 trillion in 2024, growing 10.3 per cent year-on-year. India ranks fifth globally in exports and 11th in imports, while the US leads both. A structured digital trade framework will ease compliance and cross-border services.