The Joint India-US Statement on the Framework for an Interim Trade Agreement (February 7) envisaging 18% reciprocal US tariff rates is the first of a three-stage process followed by an Interim Agreement and a Bilateral Trade Agreement according to the already agreed Terms of Reference. Simultaneously, a US Presidential Executive Order (14329) waives 25% additional duty for Indian oil imports – both public and private – from Russia conditional on its US monitored stoppage for a potential presidential determination for re-imposition upon its “resumption”. The respective tweets by the two leaders announcing it gave differing versions, especially on Russian oil imports issue and linkage with the Ukraine conflict, were preceded by a telephone conversation between them – which itself was a declared US expectation of its initiation from the Indian side even though, per diplomatic practice, the reference in official documents is only to the phone conversation.
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Nearly a year in its making – in fact, the discussions date back to the US President’s first term – the Framework touches upon the entire gamut of bilateral economic and technological relationship with compromises on both sides even if their balance can only be assessed in the future. There is the mutual opening of diverse commercial sectors especially Indian opening up of the agriculture and dairy sector for “non-competitive higher value imports”, and it envisages a major thrust in high-tech sector, especially the rapidly accelerating AI one including its manufacturing and applications-related infrastructure. An ambitious target of $ 500 billion in the next five years has been fixed which the Indian side expects to be made up by greater imports of energy products, aircraft and aircraft parts, precious metals, technology products and coking coal. There is, thus, reduction of reciprocal duties to 18% with several carveouts from both sides for even lower/zero tariffs from steep reciprocal tariffs of 25% (since August 7, 2025) announced in April 2025 by the US against countries and imposition of the additional 25% duties on India for Russian oil imports since 27 August 2025. Notably, these higher tariff duties did not affect ab initio service-related Indian exports constituting nearly 50% of overall trade with US; enhanced tariffs on steel, aluminium and automobiles are not affected by the Framework which are under the US National Security clause applicable to all countries.
Whilst this Joint Statement is seen in both countries as a certain turnaround in the overall bilateral relationship with renewed emphasis on global partnership in the statements of both leaders, the Indian leadership was particularly sensitive about its optics especially as the US statements referred to Indian concessions on sensitive issues like agriculture and dairying sector and Russian oil imports. The PM addressed the ruling party MPs first eliciting appearance in the media of several congratulatory messages from its key figures, congratulatory advertisements from commercial associations representing key economic sectors as well as measured favourable public observations by the RSS chief; unsurprisingly, the Opposition parties denounced it as capitulation. In his own address to the Rajya Sabha, the PM showcased India-EU and India-US trade deals among others as signifying India’s status as a key player on the global stage.
The Indian stock market also welcomed the Joint Statement as representing a thaw in bilateral economic – and, overall – relations with greater possibilities for trade and investment in the backdrop of a significant depreciation of the rupee and FII/FDI outflow in recent times notwithstanding rising Indian exports during this period and a demonstrated significant resilience against shocks.
The Joint Statement made no mention of Russian oil imports issue nor the H1-B concerns of the Indian side. Indian approach has been to sequester trade and Russian oil issue to be respectively handled by the commerce and external affairs ministries. Foreign minister S Jaishankar, during his last visit, met the relevant members of the US monitoring committee (Executive Order 14329); the language of the Executive Order is kept vague to serve as the signature presidential lever on the unfolding trade deal but also on practically everything else. At the same time, similar lever is fashioned in another Presidential Executive Order (with identical monitoring mechanism) envisaging 25% tariff duties on countries importing goods and services from Iran; this will potentially cover a large number of countries, including India, comprising several US friends plus China.
International pressure on a globalising India is inclining it to open practically–if uncomfortably–all sectors of the economy, including agricultural and “carbon” economy. Whilst Indian diplomacy’s mutual dependency fulcrum helps seek openings in every situation, our critical dependencies on energy and military hardware do bring out the difficulties in its day-to-day conduct; for example, US pressure has led India to drastically cut/eliminate oil imports from Venezuela, Iran and Russia to its detriment as the former seeks to enhance the latter’s dependency on itself in the pursuit of its own geopolitical aims.
The current geopolitical and geo-economic volatility has worsened in recent times which has been considerably contributed to during the US President’s second term due to US’s transactional, tactical diplomacy. Yet, as the recent US National Security Strategy (December 2025) demonstrates, the US has interests in preserving the current global power equilibrium to secure better economic future for itself. Its tactical approach, however, is not helping with this in the near term due to its unsustainability downside evident in frequent statements to upend the concluded agreements of all descriptions. The countervailing movements of other countries, increasingly nervous in this larger paradigm as exemplified – but not only – by the quickened pace of the conclusion of the India-EU trade agreement, does provide opportunities for India as well overall but also vis-à-vis China where a certain thaw is also perceptible. The larger paradigm, characterised by a near dysfunctional global order and looming global challenges, dictates constant, tougher choices requiring stronger institutional and economic resilience.
This article is authored by Yogendra Kumar, former ambassador and author, New Delhi.