Expect US to implement 18% tariff on Indian goods this week: Commerce secy | Economy & Policy News

The United States (US) is expected to reduce the current 25 percent customs duty on various Indian exports to 18 percent this week, and any delay in implementation will be borne by the Indian team, which is scheduled to visit Washington in the next few days.

“The 25 per cent (punitive) tariff has already been lifted and the remaining 25 per cent (tariff) will be reduced to 18 per cent. I have been told that they are processing it and it should be done quickly. Our expectation is that this will happen this week. If not, the team will be there next week and we can investigate why it is taking time,” Commerce Secretary Rajesh Agrawal said at a media briefing on Monday.

A delegation led by Darpan Jain, India’s chief negotiator of the India-US trade deal, is heading to Washington to finalize the legal framework. Officials from both sides continue virtual talks to determine the legal text, while in-person talks are expected to take place next week.

India and the US issued a joint statement on February 7 outlining the outlines of an interim trade agreement. As a first step, Washington lifted 25 percent punitive tariffs on India “in recognition of India’s commitment to stop purchasing Russian Federation oil.” Negotiators are currently working to turn the agreed drafts into a legal agreement that both sides aim to sign by March.

“Our effort is to finalize, close and sign the legal agreement by March 2026. It is an effort, but I am not putting a deadline on it because there are some complexities in finalizing the legal agreement that need to be resolved satisfactorily,” Agrawal said.

He stated that under the agreement, India will have privileged market access for the cotton varieties it currently imports from the US. Besides highland cotton, India primarily imports extra-long-staple cotton from the United States. The United States mainly exports upland cotton, the primary cotton variety.

These remarks follow Commerce and Industry Minister Piyush Goyal’s statement last week that India will seek preferential duty access for garments made of yarn and cotton under the interim trade agreement with Washington; This provides benefits similar to those that Bangladesh receives under its trade agreement with the United States.

Exclusion of digital commerce

The digital trade section is not part of the interim agreement between India and the US, a senior commerce department official said on Monday. While New Delhi and Washington were expected to negotiate bilateral digital trade rules, these will instead be included in the broader trade agreement, also known as a bilateral trade agreement (BTA), which will likely take longer to conclude.

India is expected to negotiate digital trade rules aimed at avoiding the imposition of tariffs on e-commerce electronic transmissions and eliminating the digital services tax, according to a White House briefing published last week and later amended.

However, the memorandum was revised a day later and aligned with the joint statement, which said: “India will address non-tariff barriers affecting bilateral trade in priority areas. The United States and India will negotiate rules of origin that will ensure agreed benefits accrue predominantly to the United States and India.”