In an exclusive interview with CNBC-TV18, Commerce and Industry Minister Piyush Goyal stated that a new tariff system between India and the United States is expected to be imposed as early as next week – marking a major development in India-US bilateral trade relations. According to Goyal, Washington has the potential to issue an executive order to reduce tariffs on Indian exports even before the official legal trade agreement is signed, providing immediate relief to exporters and industry sectors that have been under pressure from higher duties over the last year.
According to Goyal, after the US President signs the executive order, reciprocal tariffs on several Indian products entering the US will be drastically reduced, with taxes cut to 18% from present highs. This measure is part of the interim India-US trade agreement framework formed after months of rigorous discussions, and it is scheduled to take effect within four to five days, providing exporters with certainty and increased access to one of India’s key international markets.
What the New Tariff Regime Entails:
The expected tariff changes are designed to offer early harvest benefits to Indian exporters ahead of the formal signing of a comprehensive trade agreement, which both countries are targeting by mid-March 2026. The planned executive order by the United States could immediately reset duties on Indian exports, with approximately half of these shipments potentially entering duty-free, while others will see reduced duties of around 18%.
Currently, many Indian goods face significantly higher tariff barriers under the existing regime, which had earlier included punitive levy rates that reached as high as 25% or more on certain items. With the interim framework in place, textiles, gems and jewellery, and several other categories are expected to enjoy reduced duties or even zero-duty access, depending on their product classification.
The interim trade deal has sought to balance market access while protecting sensitive Indian sectors. Agriculture staples such as maize, dairy and core grains were reportedly excluded from tariff cuts, as New Delhi pressed to safeguard its domestic farming ecosystem. The result is a tariff reset that aims to support export sectors without undermining key domestic industries.
Importantly, the tariff change for Indian exports to the U.S. will be triggered by an executive order rather than the formal bilateral agreement’s signature, enabling both nations to begin enjoying modified trade terms sooner than previously expected. Goyal noted that this executive action could come within days likely next week offering exporters the chance to benefit immediately while the full legal pact is still being finalised.
Context of the Interim Trade Framework:
The proposed tariff adjustments are part of a broader interim trade framework between India and the US that lays the groundwork for a more comprehensive trade pact. Negotiators from both sides have been working intensively since late 2025 to resolve tariff disputes that emerged following the imposition of high reciprocal duties by the United States on Indian goods over issues such as energy imports.
As part of the larger framework, India has also made promises to buy large amounts of American goods over the next five years, a goal officials have called aspirational rather than legally binding. Both countries aim to finalize a legally binding trade agreement by mid-March 2026. While the detailed contours of the final pact are still being shaped, the early tariff cut signals a willingness on both sides to provide commercial certainty and support exporters and importers alike amidst broader global economic uncertainties. Traders and businesses have welcomed the move, seeing it as a positive step toward strengthened trade ties and enhanced access to vital markets.
Impact on Indian Exporters and Domestic Debate:
The expected tariff adjustment comes at a time when Indian exporters have faced steep duties on key goods exported to the U.S., including textiles, handicrafts, gems and jewellery, as well as several industrial categories. Analysts predict that the reduced tariff regime could boost competitiveness, making Indian products more price-competitive relative to other suppliers in the U.S. market.
For small and medium enterprises (MSMEs) that rely heavily on export orders from the U.S., an 18% tariff or zero duty for select lines will ease cost pressures and potentially open new opportunities for market expansion. Export councils and industry bodies have expressed cautious optimism that these early changes will help sustain export momentum as formal trade arrangements are finalised.
However, the action has also generated discussion in India. The more general consequences of the temporary trade framework have drawn criticism from a number of groups representing farmers and political figures, who fear that tariff concessions may expose vulnerable domestic industries to more competition. Although tariff reductions help export-oriented companies, these voices argue that they should be designed to safeguard domestic producers who are at risk.
Formal Trade Deal and Economic Engagement:
As the interim tariff changes are poised to take effect next week, both New Delhi and Washington are preparing for continued dialogue on the comprehensive trade deal’s details. Officials from the United States Trade Representative’s (USTR) office are expected to visit India in the coming weeks, as part of the process toward finalising a joint statement and legal agreement.
Once the tariff resetting executive order is issued, Indian exporters will likely begin to see immediate relief at the border, helping them compete more effectively in the U.S., where India remains one of the fastest-growing sources of merchandise imports. Meanwhile, the broader negotiations will focus on market access, tariff schedules, and safeguarding mutual economic interests.
For politicians and business leaders, the next two weeks will be critical in defining trade relations that could transform India’s economic relationship with one of its most important global partners. If implemented as planned, the tariff cuts next week will be an important moment, giving firms earlier access to better trade conditions and boosting confidence ahead of the formalisation of the India-US trade agreement.
