(Image source from: AP)

The United States and India have reached a temporary trade deal that reduces US taxes on Indian products to 18 percent. Under this agreement, the US has removed the extra 25 percent duty it had placed on imports from India. India will decrease or eliminate taxes on all US manufactured goods and on various US agricultural and food products, such as dried grains for animals, red grain for livestock, tree nuts, fresh and processed fruits, soybean oil, wine, and spirits, among others. The US will impose an 18% tax on Indian goods, including textiles and clothing, leather and shoes, plastic and rubber products, organic chemicals, home decorations, handmade items, and some machinery. If the Interim Agreement is fully completed, the US will stop the similar tax on many Indian items, including generic drugs, gems, diamonds, and parts for airplanes. Additionally, the US will eliminate taxes on specific aircraft and parts coming from India.

Both nations will work on resolving non-tax obstacles that complicate trade, making it easier for businesses on both sides. India will also address long-standing challenges for US medical devices to help these products enter the Indian market with less difficulty. India will remove restrictive import rules for US information and communication technology goods that slow down market access or limit quantities. India will also tackle persistent non-tax barriers affecting US food and agricultural products to enhance access for these items. Over the next five years, India aims to purchase $500 billion worth of US goods, including energy products, aircraft and components, precious metals, technology items, and coking coal. Both countries will also increase trade in technology items like Graphics Processing Units for data centers and enhance collaborative tech efforts. India and the US will continue discussions on the BTA to further open markets. During these BTA discussions, the US will take into account India’s request to keep lowering taxes on Indian goods.