US to Reduce Tariffs on Indian Exports Within Days: India’s Commerce Minister

A sharp rollback of US tariffs on Indian exports, from 50 percent to 18 percent, is expected within days, triggering the first phase of a broader India-US trade partnership. However, the US has reportedly set an ambitious procurement target of US$500 billion for India, and uncertainties around execution timelines and regulatory clarity continue to raise questions about the trade agreement implementation.

The United States (US) is set to sharply reduce tariffs on Indian exports within the next four to five days, following the signing of a joint statement under a bilateral trade framework, Commerce and Industry Minister Piyush Goyal said on February 5, 2026.

Once the joint statement is issued, the US will cut additional duties on Indian goods from 50 percent to 18 percent through an executive order by US President Donald Trump. These additional tariffs had been imposed earlier and included:

1. 25 percent reciprocal duties; and
2. 25 percent penalties linked to India’s purchase of oil from Russia.

India, in turn, will begin reducing tariffs on select American imports after mid-March, India’s commerce minister has confirmed.

First phase of India-US trade partnership

According to the commerce minister, the joint statement by the two countries will formally trigger the first phase of the India-US trade partnership, with the tariff rollback on Indian exports taking effect immediately after its issuance.

While US tariff reductions are being implemented through executive action, India’s tariff adjustments will follow a different legal route, as they are governed by Most Favored Nation (MFN) tariff commitments and require formal authorization.

Formal trade agreement timeline

Alongside the joint statement, officials from both countries are drafting a formal legal agreement, which is expected to take four to six weeks to finalize.

India’s Commerce Secretary, Rajesh Agrawal, has said the agreement is likely to be signed by mid-March of 2026 and will provide India with the legal basis to reduce import duties on US goods. He noted that unlike US executive tariffs, India’s tariff reductions require a statutory framework.

India’s current stance on investment commitments

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Goyal clarified that India has not committed to investing in the US as part of the trade arrangement. This clarification followed comments from the White House suggesting India would invest $500 billion in the US.

According to the minister, the reference appears to have stemmed from a misunderstanding. Under the framework, India has agreed only to purchase up to US$500 billion worth of goods from the US over five years, not to make direct investments.

Planned purchases from the US

India’s proposed purchases from the US would span several sectors, including:

1. Energy,
2. Technology,
3. Agriculture,
4. Coal, and
5. Industrial goods.

Goyal said India’s rapid economic growth will naturally drive higher demand for energy, data center equipment, and information and communication technology products, creating significant sourcing opportunities from the US.

Potential boeing aircraft orders under the US-India trade deal

India is reportedly considering large-scale aircraft purchases from Boeing, with potential orders valued at up to US$80 billion, as part of a broader US-India trade understanding, according to a CNBC report published on February 5, 2026. If India proceeds with these purchases, they would rank among the largest aviation procurement pipelines linked to a single country.

India’s commerce minister stated that the estimate includes Boeing aircraft as well as engines, components, and spare parts, which could push India’s aviation-related imports from the US beyond US$100 billion.

However, India has yet to clarify delivery schedules, funding structures, and the extent of firm commitments. Market observers also note that this aviation demand forms part of a wider projection of US goods procurement under the trade package, which has attracted both strong interest and skepticism over its practical feasibility.

Overall, the prospective aircraft tranche underscores the central role of civil aviation in India’s import strategy and illustrates how large-scale equipment purchases increasingly shape the evolving trade relationship between India and the US.

Linking India’s data centre expansion with US sourcing

The central government has pointed to recent budgetary incentives for data centers, suggesting that large-scale investments in this sector could further strengthen India-US trade relations.

If India attracts US$100 billion-150 billion in data center investments, it would generate substantial demand for imported equipment, much of which could be sourced from the US, creating opportunities to align infrastructure development with trade strategy.

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Supply chain diversification and resilience

India’s global procurement currently exceeds US$300 billion annually and is projected to rise to US$2 trillion over the next five years, according to the commerce secretary.

Sourcing US$500 billion worth of goods from the US during this period would help diversify India’s import base and enhance supply chain resilience without displacing existing trade relationships.

Trade framework and outstanding issues

On February 2, 2026, Trump announced that Washington and New Delhi had reached an understanding on a trade framework. The announcement came shortly after India concluded a free trade agreement (FTA) with the European Union (EU) on January 27, 2026.

Under the India-US trade deal: 

• the US plans to reduce tariffs on Indian exports to 18 percent;
• India is expected to lower duties on certain US goods; and
• India would significantly increase purchases of American products.

However, Indian authorities have not officially confirmed several claims, including assertions that India would:

• Reduce tariffs on US goods to zero, or
• India will halt oil imports from Russia.

Market size and practical constraints

While analysts believe that India will expand its purchases from the US, they continue to question whether India can realistically achieve the US$500 billion procurement target.

In FY 2024–25, India imported goods worth US$721.2 billion from all trading partners, of which imports from the US accounted for about US$45 billion. Experts point out that sourcing US$500 billion from the US alone would require India to significantly reconfigure its import mix.

Source: Department of Commerce, Ministry of Commerce and Industry, GoI.

*For FY 2025–26, provisional merchandise trade data is available for the period April–December 2025. The full-year figures will be revised and updated in the next financial year, i.e., FY 2026-27.

Policy uncertainty and risks

Trade experts have cautioned that the current arrangement remains a non-binding framework, subject to revision. They have pointed to past instances where tariff reductions announced by the US were later reversed, raising concerns about potential policy volatility and backtracking.

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