India offers quota-based auto duty cuts, tariff reduction on alcohol under US trade pact
Within the scope of the agreement, it was also stated that the customs duties applied to India’s exports of $ 30.94 billion will be reduced from 50 percent to 18 percent, and the other mutual duties of $ 10.03 billion will be abolished.
“This means that a significant portion of Indian goods entering the US market will now face either much lower tariffs or completely duty-free access, significantly increasing price competitiveness,” the government said.
It was stated that India’s agricultural exports of $ 1.36 billion will be provided with zero additional US tax access. Key products include spices, tea, coffee, fruits, nuts and processed foods.
It was stated that sensitive sectors such as automobiles were liberalized through a combination of quota and tax reduction mechanisms.
According to an official, India does not grant any customs privileges to the US on electric vehicles.
Medical devices have been covered through long and gradual phase-in programmes, and precious metals and other sensitive industrial products have been managed through quota-based tariff reduction.”Alcoholic beverages have been offered under tariff reduction as well as minimum import price-based formulations, consistent with India’s approach in other FTAs (free trade agreements).” he added.
Listing sectoral gains for India, the report stated that tariffs on textile exports will be reduced from 50 percent to 18 percent, silk will receive zero customs duty, and increased opportunities worth $113 billion will be opened in the US market.
Similarly, tariffs for the domestic gem and jewelery industry will be reduced to 18 percent, providing privileged access to the American market worth $61 billion.
“In addition, 0 percent duty market access is secured for major product categories spanning the $29 billion U.S. market, including diamonds, platinum and coins,” it said.
Major export categories expected to benefit include cut and polished diamonds, lab-grown synthetic diamonds, colored gemstones, synthetic stones and gold, silver and platinum products.
AGRICULTURAL SECTOR:
The report stated that India maintains a trade surplus of $1.3 billion in agricultural trade with the United States, with exports of $3.4 billion and imports of $2.1 billion in 2024.
The US will impose zero additional duties on India’s exports of $1.36 billion.
Beneficiary products include spices; tea and coffee; coconut oil and coconut oil; nuts such as cashews and chestnuts; Fruits such as avocado, banana, guava, mango, kiwi, papaya, pineapple and mushrooms.
Grains such as barley and canary seed; baked goods; cocoa and cocoa preparations; sesame and poppy seeds; Processed products such as fruit pulp, fruit juices and jams will also be used.
In line with India’s approach in previous trade agreements, agricultural market access is structured according to crop sensitivity.
The proposal is categorized into immediate elimination of duties, phase-out (up to 10 years), tariff reduction, preference margin and tariff rate quota mechanisms.
He said highly sensitive agricultural sectors remain fully protected under a carefully crafted exemption category. These generally include meat, poultry and dairy products; GMO food products; soybean meal; sweetcorn; and grains.
For certain sensitive agricultural products, a tariff reduction category has been implemented to ensure that duty protection continues at a moderate level.
Examples include plant parts, olives, pyrethrum, and oil cakes.
Some highly sensitive items have been liberalized under Tariff Rate Quotas (TRQs), where limited quantities are allowed at reduced duties.
It was stated that the products in this category include shelled almonds, walnuts, pistachios and lentils.
It added that it has been agreed to phase out tariffs for up to ten years for some intermediate products used by India’s food processing industry and sourced from multiple countries.
These include albumins, certain oils such as coconut oil, castor oil, and cottonseed oil, and herbs and plant parts.
“The immediate removal of duties is proposed only for certain non-sensitive products that have already been liberalized under other free trade agreements,” the statement said.
INDUSTRIAL GOODS:
The government said the deal secures zero additional duty access on $38 billion worth of industrial exports.
India will face zero reciprocal duties on major categories of industrial products, including gems and diamonds, platinum and coins, clocks and watches, essential oils, inorganic chemicals, paper products, plastic and wood, and natural rubber.
Market access for American industrial goods, on the other hand, is tightly structured around product sensitivity, combining immediate elimination of tariffs, phased reduction (up to ten years), and quota-based access.
DIGITAL TRADING:
In 2024, India’s exports of digitally delivered services increased by 10.3 percent annually, reaching $0.28 trillion.
India ranks 5th in exports and 11th in imports of global digitally delivered services.
The United States ranks first in both exports and imports.
“The structured digital trade framework between the two countries reduces regulatory uncertainty, reduces compliance disputes and facilitates cross-border service delivery,” he said.
