New Delhi, February 9: A new report highlights that India should prioritize trade openness and essential reforms to remain competitive in the long run, especially in light of the interim trade agreement with the United States.
According to the report by Systematics, India needs to address inverted duty structures, simplify logistics and customs processes to reduce raw material costs, and promote assembly-based manufacturing for mass production and employment. Additionally, it emphasizes the need to reduce protectionism, expand free trade agreements (FTAs), strengthen research and development (R&D), and tackle issues related to land, labor, and skills.
The report suggests that this comprehensive strategy will lead India towards advanced manufacturing, firmly integrate the country into the global value chain (GVC), and help enhance competitiveness in the long term while mitigating risks associated with Donald Trump’s stringent trade policies.
Under the India-U.S. trade agreement, India gains tariff relief and improved access to the American market. However, this comes with commitments, including a $500 billion import obligation and restrictions on oil imports.
The bilateral trade agreement, finalized on February 7, 2026, emphasizes equal market access for both nations. India has agreed to reduce or eliminate tariffs on U.S. industrial goods, food items, and agricultural products, including distillers dried grains with solubles (DDGS), red sorghum, nuts, fruits, soybean oil, alcohol, and spirits.
In return, the U.S. has set an 18% tariff on certain Indian products, including textiles, apparel, leather, plastics, chemicals, and machinery. There are also plans to eliminate tariffs on generic drugs, gemstones, and aircraft parts, contingent on the proper implementation of the interim agreement.
From the U.S. perspective, this framework aims to maintain trade balance and eliminate barriers present in the American market.
The report indicates that this deal brings tariff relief for India, potentially lowering effective tariffs on Indian products in the U.S. to 18%, which is lower than those faced by many competing countries. According to India’s Commerce Minister, this will bolster employment-driven sectors and initiatives like Make in India and Atmanirbhar Bharat (self-reliant India).
The agreement will also eliminate tariffs on aircraft and their parts imposed under national security, providing a special quota for automobile parts, thereby supporting growth in the aviation and manufacturing sectors.
My name is Bhupendra Singh Chundawat. I am an experienced content writer with several years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including technology, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.
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