Blitz Bureau
NEW DELHI: Six months after the interim India-United States trade agreement was announced in February, the number an Indian exporter actually lives with is 18 per cent. A year ago it was 50. That is the single most consequential change in India’s external economics this year, and it has barely been explained to the people it affects.
The arithmetic is worth setting out plainly, because the headline figure moved twice. In August 2025 the United States applied a 25 per cent reciprocal tariff on Indian goods, and then added a further 25 per cent penalty linked to India’s purchases of Russian crude — the combined 50 per cent rate taking effect on 27 August 2025. The additional 25 points were removed by executive order after India’s commitments on Russian oil. Under the interim agreement announced in February 2026, the reciprocal rate itself came down to 18 per cent. Commerce Minister Piyush Goyal put the figure on the record at the time.
Thirty-two points of relief: the tariff on Indian goods entering the United States fell from a peak of 50 per cent to 18 per cent under the interim agreement announced in February 2026.
A tariff is not an abstraction. It is the difference between a Tiruppur order being placed in India and being placed somewhere else.
At a Glance
• Peak rate: 50 per cent, effective 27 August 2025
• Composition: 25 per cent reciprocal + 25 per cent penalty linked to Russian crude
• Penalty removed: by US executive order following India’s commitments
• Current reciprocal rate: 18 per cent, under the interim agreement announced February 2026
• Stated by: Commerce and Industry Minister Piyush Goyal
• Still open: the full first-phase bilateral trade agreement, covering market access, digital trade and non-tariff barriers
• Most exposed sectors: textiles and apparel, gems and jewellery, shrimp, engineering goods
For the reader who does not trade, the relevance is employment. The Indian export lines most exposed to the American tariff are also among the most labour-intensive in the economy — textiles and apparel, gems and jewellery, marine products, engineering goods. These are the sectors where a shift of a few percentage points in landed cost decides whether a buyer in New Jersey places the order in Tiruppur or in Dhaka, and where the difference shows up within a season as overtime, or its absence, in a shed in Tamil Nadu. Thirty-two percentage points is not a marginal adjustment; it is the difference between a market being viable and being priced out.
What remains unfinished is the larger agreement. The interim arrangement was always described by both governments as the first phase, with market access, digital trade and non-tariff barriers still to be settled. India’s stated negotiating position has been consistent: any arrangement should leave Indian goods on terms no worse than competing suppliers enjoy. The constructive step available now is on the Indian side of the ledger — the exporters who most need the 18 per cent rate are small firms who often do not know it applies to them. A plain-language advisory from the Directorate General of Foreign Trade, tariff line by tariff line, would convert a diplomatic outcome into an order book. The negotiation was the hard part. Telling the weaver what was won should be the easy one.
