Tariffs at 18 per cent: what India actually agreed to in February
The interim framework cut US tariffs from 50 per cent and removed the Russian-oil penalty. A Section 301 investigation opened weeks later.
On 6 February 2026, India and the United States released a joint statement setting out a framework for an interim trade agreement. It removed the punitive 25 per cent tariff on Indian goods immediately and set out a reduction of US reciprocal tariffs from 25 per cent to 18 per cent — bringing the effective rate down from a peak of 50 per cent.
The following day, the executive order imposing tariffs tied to India’s purchases of Russian oil was revised to eliminate them.
What India gave
The concessions are substantial. India committed to tariff cuts on US industrial and agricultural products, with the stated goal of reducing tariff and non-tariff barriers to zero. The framework also carries a $500 billion purchase commitment over five years.
Agricultural access is the politically sensitive part. Indian governments across parties have protected the farm sector from import competition, and any commitment that touches it carries domestic cost that a tariff schedule does not capture.
The part that undercuts it
Weeks after the framework was announced, in March 2026, the US Trade Representative initiated investigations into structural excess capacity in manufacturing and forced labour practices — producing a proposed additional 12.5 per cent Section 301 tariff on Indian imports.
This is the structural weakness of the arrangement. An interim framework that reduces one tariff while a separate statutory process constructs another does not deliver the thing Indian exporters need, which is predictability. A firm deciding whether to expand capacity for the US market cannot plan against a rate that may be 18 per cent or 30.5 per cent depending on an investigation’s outcome.
Chief negotiators met in New Delhi from 1 to 4 June 2026, with finalising the interim agreement before 24 July framed as the way to shield India from the Section 301 action.
Reading it fairly
It would be wrong to describe the February framework as a defeat. Moving from 50 per cent to 18 per cent is a material improvement for textiles, gems and jewellery, shrimp and engineering goods — sectors where Indian exporters had been pricing themselves out.
It would be equally wrong to describe it as settled. The agreement is interim by name, the purchase commitments are large and back-loaded, and the Section 301 track runs on its own timetable.
Why it matters for the states
For a state like Andhra Pradesh, building three new ports and courting export-oriented electronics manufacturing, the terms of US market access are not an abstraction. Capacity being built now is being built on an assumption about tariff levels three years out.
That assumption is currently a framework, not a treaty. It is worth watching whether it becomes one.