India has secured a significant trade victory by negotiating a permanent 10% US tariff on around 70% of its exports, avoiding the proposed 12.5% rate that would have applied to most shipments. The new tariff structure, effective from June 2026, provides Indian exporters with a competitive advantage in key sectors such as textiles, apparel and leather products.
The agreement follows negotiations that began in February 2025. An interim deal reached in February 2026 had already reduced reciprocal tariffs from 25% to 18%, with the latest agreement further lowering the rate for the majority of Indian exports.
In return, India agreed to reduce tariffs on selected US industrial goods, food products and agricultural imports. Commerce and Industry Minister Piyush Goyal reiterated that India would only conclude trade arrangements that preserve its tariff advantage over competing economies, particularly China.
The deal also resolves a major trade concern related to India’s purchases of Russian oil. The US has withdrawn the additional 25% tariff imposed on Indian imports after India indicated it would gradually reduce imports of Russian crude. India’s move to prohibit imports of goods produced using forced labour also played a role in securing the preferential tariff treatment.
Despite the breakthrough, some uncertainties remain. The United States continues to investigate excess manufacturing capacity, which could lead to additional sector-specific duties if Indian industries are found to benefit from subsidized overcapacity.
Negotiations on a comprehensive Bilateral Trade Agreement (BTA) between India and the US are also continuing. While the latest tariff arrangement covers nearly 70% of Indian exports, discussions are expected to address the remaining exports and broader market access issues in the coming rounds.
The agreement is expected to enhance India’s export competitiveness in the US market while providing greater certainty for exporters amid evolving global trade dynamics.
