The Reality of the Trade Agreement

07-Feb-2026 11:53 AM

The long-awaited bilateral trade agreement between India and the United States is in the interest of both countries and should therefore be viewed positively. There is no doubt that whenever a bilateral trade agreement is signed, both sides aim to gain maximum benefit from it.

The current agreement is no exception. The Indian government is emphasizing that the interests of Indian farmers and dairy producers have been fully protected in this agreement.

This claim can be trusted. But the question arises whether the US has agreed to this agreement to ensure unilateral benefits for India? It is a well-known fact that the US cannot sacrifice its own interests.

This means that it has also been given several concessions by India, the details of which are yet to be revealed. Meanwhile, there are reports that the US has stopped collecting the additional punitive tariff of 25 percent that it had imposed on Indian products under the pretext of India buying mineral oil and weapons from Russia.

The US has already announced a reduction in the import duty on Indian products from 25 percent to 18 percent. This suggests that only an 18 percent customs duty will now be applicable on Indian products in the US.

The Indian government is claiming that this bilateral trade agreement will expand the market for Indian products in the US. It is necessary to understand the reality of this claim.

This comparison is logical for the period after August 2025, but it does not seem accurate when compared to the period before that.

The US had imposed a 25 percent tariff on Indian products on August 20th and a 50 percent tariff on August 27th, while the import duty rate was much lower before that.

This means that the tax on Indian products in the US will be lower now compared to August 2025, but it will be higher compared to July 2025. A positive point for India is that the products of its competitor supplier countries will face relatively higher tariffs.

This will provide some relief to exporters of rice, spices, textile products, and cashews, among others. The agreement document is likely to be made public in the next few days, and then the full details will become clear.