The Indo-US Interim Trade Pact: 18% Tariff Relief Vs Broader US Market Access – Is the Balance Truly Reciprocal?
Analyzing Asymmetries in the New Indo-US Interim Trade Landscape from an Indian Perspective.
The recent framework for the Indo-US Interim Trade Agreement, announced via a joint statement on February 6–7, 2026, marks a significant de-escalation in bilateral trade tensions that had risen sharply with punitive US tariffs reaching up to 50% (including a 25% penalty tied to India’s Russian oil imports).
From an Indian viewpoint, the deal delivers tangible relief by slashing US tariffs on key Indian exports to a reciprocal 18%, potentially unlocking better competitiveness for labor-intensive sectors like textiles, apparel, leather, footwear, gems, pharmaceuticals, and chemicals. This tariff overhang removal has already sparked positive market reactions, with expectations of boosted exports and support for MSMEs that form a critical part of India's export ecosystem and employment base. However, a closer examination reveals notable asymmetries that tilt certain advantages toward the US, raising questions about whether the reciprocity is as balanced as the headline figures suggest.
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Trade diplomacy is often sold in smiles. But real outcomes hide in spreadsheets.
And when you strip the Indo-US interim trade framework of its headlines and look only at who conceded first, who gained immediately, and whose benefits are conditional, a simple truth emerges:
The United States walks away with broader, faster, and structurally stronger gains — while India settles for partial tariff relief.
Not a disaster. But definitely not equal.
The “Big Win” for India — That Isn’t as Big as It Sounds
The US slashed punitive tariffs from 50% to a uniform 18% on many Indian exports — textiles, leather, gems, chemicals, pharmaceuticals.
That’s relief. No doubt.
But here’s the reality check:
- 18% is still a barrier — not free access.
- Competing nations already enjoy far lower or preferential rates.
- Key categories like generic drugs, diamonds, and aircraft parts remain conditional.
India didn’t gain open doors. It gained a slightly wider window.
What India Opened — Wide and Immediately
India has committed to eliminate or substantially reduce tariffs on all US industrial goods and a wide range of US food and agricultural products (Eg. dried distillers’ grains, red sorghum for animal feed, tree nuts, fresh/processed fruits, soybean oil, wine, spirits, and others). This opens significant doors in India's large and growing consumer and industrial markets, where US exporters have long faced high barriers (India's average applied tariffs in agri and industrial sectors have historically been elevated). To summarise, India agreed to:
🔹Slash or eliminate tariffs on US industrial goods.
🔹Open large agricultural import segments.
🔹Ease regulatory barriers on medical devices and tech.
🔹Remove long-standing non-tariff restrictions affecting US exports in areas like medical devices, ICT goods, and agriculture, potentially easing entry for American products.
This is not selective access. This is structural market opening.
The Massive Puchase Intent: The $500 Billion Signal That Changes the Power Equation
India announced intent to purchase up to $500 billion of US goods over five years, covering:
🔹Energy — oil, gas, coal.🔹Aviation and aircraft components.
🔹Semiconductors and GPUs for data centers.
🔹Precious metals.
🔹Select agricultural products.
Not surprisingly, even partial execution anchors long-term demand toward American suppliers.
Energy and Geopolitical Realignment:
The deal ties into India's pivot from Russian crude (which had triggered US penalties), enhancing US leverage in global energy markets and aligning with broader strategic goals.
Where the Structural Imbalance Sits
| India Gives | US Gives |
|---|---|
| Immediate tariff reductions. | Partial relief capped at 18%. |
| Broad market access now. | Some benefits conditional later. |
| Regulatory and licensing easing. | Subject to reviews and investigations. |
| Large long-term purchase intent. | No matching export demand pledge. |
Leadership Optics Vs Trade Mechanics
Diplomatic goodwill remains strong. Strategic alignment is clear.
But trade deals are measured by symmetry — and here, the structure quietly leans toward the US.
America secures access, influence, and long-term positioning in India’s growth story. India secures tariff breathing room and stability.
So Is This a Bad Deal?
No.
But it is not balanced either.
India pays more upfront. The US gains faster and deeper.
One side opens markets. The other trims penalties.
The Bottom Line
This interim pact works — but it works better for America, with immediate and structured gains: guaranteed demand in key sectors, deeper penetration into India’s market (especially industrial and select agri segments), and reduced competition from other suppliers.
Protections remain for some Indian agri segments (such as rice, wheat, dairy, and poultry), but openings in others could pressure local farmers and manufacturers if cheaper, subsidized US imports rise.
India gains relief. The US gains position.
And in global trade, positioning often decides the long game.
Overall, while the pact strengthens ties and supply-chain resilience, the structure of concessions leans subtly toward the US — leaving the central question open: is this truly reciprocal, or simply tilted in America’s favour in the near term?
The real verdict will emerge in implementation as talks move toward a fuller bilateral agreement.
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