US Tariffs Cut to 18% on Indian Exports: What New Trade Deal Means for Businesses and Jobs

The United States has officially reduced tariffs on Indian exports to 18 per cent, marking a significant shift in trade relations between the two countries. The revised duties, which came into effect from February 7, are part of an interim trade framework designed to strengthen economic ties and pave the way for a broader bilateral trade agreement expected to be finalised in the coming months.

The reduction from the earlier 50 per cent tariff level offers immediate relief to Indian exporters who faced months of pricing pressure in one of their largest overseas markets. Labour-intensive industries such as textiles, apparel, leather goods, footwear, handicrafts, plastics and organic chemicals are expected to see a boost in demand as lower duties improve competitiveness for Indian products in the US market.

Alongside the tariff cut, several high-value sectors have received a major advantage through complete removal of duties. Generic pharmaceuticals, gems and diamonds, and select aircraft components will now enjoy tariff-free access, opening stronger opportunities for manufacturers and exporters aiming to expand their presence in global supply chains. Analysts believe these changes could accelerate growth for India’s manufacturing ecosystem and support employment generation across multiple sectors.

The interim trade framework also introduces a preferential tariff-rate quota for automotive components, aligned with US regulatory standards. This move could help Indian suppliers integrate more deeply into international aerospace and automotive networks, areas where demand is steadily rising.

In return, India has agreed to reduce or eliminate tariffs on a range of American industrial and agricultural products. These include items such as tree nuts, animal feed, fruits, soybean oil and certain beverages. Some duties will be scrapped immediately, while others are expected to be phased out gradually. The arrangement reflects a reciprocal approach aimed at balancing trade benefits for both economies.

Another key feature of the agreement is increased cooperation in technology and digital trade. Both sides have committed to addressing long-standing non-tariff barriers affecting sectors such as medical devices, information and communication technology goods, and agricultural products. Discussions around standards, certifications and conformity procedures are expected to simplify cross-border trade and reduce compliance hurdles for businesses.

The latest development follows months of negotiations after the United States imposed steep reciprocal tariffs last year, which had significantly affected Indian exporters. With the new framework now in place, trade flows between the two nations are likely to stabilise while negotiations continue toward a comprehensive bilateral agreement.

Industry experts view the tariff reduction as a strategic move that positions India more strongly within global supply chains at a time when companies are diversifying sourcing strategies. For Indian businesses, the revised duty structure signals renewed access to one of the world’s largest consumer markets and an opportunity to scale exports in both traditional and high-tech sectors.