India adopts quota-based auto duty cuts, alcohol tariff relief under US pact; export access widens – The Times of India

Benchmarking its market access strategy to product sensitivity, India will grant quota-based duty concessions in the automobile sector while offering market access to alcoholic beverages under tariff reduction and minimum import price-based formulations under the trade pact with the United States, the government said on Monday, PTI reported. Under the agreement, tariffs on $30.94 billion of India’s exports will be reduced from 50 per cent to 18 per cent, while reciprocal tariffs on another $10.03 billion will be eliminated.

“This means a substantial share of Indian goods entering the US market will now face either sharply lower tariffs or completely duty-free access, significantly improving price competitiveness,” the government said.The government said $1.36 billion of Indian agricultural exports will receive zero additional US duty access. Key products include spices, tea, coffee, fruits, nuts and processed foods.

Sectoral gains across textiles, gems, agriculture

Sensitive sectors such as automobiles have been liberalised through a mix of quota and duty reduction mechanisms. According to an official, India is not granting any duty concessions on electric vehicles to the US.Medical devices have been placed under long and staggered phasing schedules, while precious metals and other sensitive industrial products are being managed through quota-based tariff lowering.“Alcoholic beverages have been offered under tariff reduction along with minimum import price-based formulations, consistent with India’s approach in other FTAs (free trade agreements),” it added.Listing sectoral gains, the government said tariffs on textile exports will be cut from 50 per cent to 18 per cent, while silk will get nil duty access, opening opportunities in the US textile market valued at $113 billion.Tariffs for the domestic gems and jewellery sector will also fall to 18 per cent, providing preferential access to the US market valued at $61 billion.“In addition, 0 per cent duty market access has been secured for major product categories including diamonds, platinum and coins, covering a US market of $29 billion,” it added.Key export segments expected to gain include cut and polished diamonds, lab-grown synthetic diamonds, coloured gemstones, synthetic stones and articles made of gold, silver and platinum.

Agri access structured by sensitivity, protection retained

India maintains a $1.3 billion trade surplus in agricultural trade with the US, with exports of $3.4 billion and imports of $2.1 billion in 2024, the government said.The United States will apply zero additional duty on Indian exports worth $1.36 billion. Beneficiary items include spices, tea, coffee, copra, coconut oil, cashew nuts, chestnuts, avocados, bananas, guavas, mangoes, kiwis, papayas, pineapples and mushrooms.Cereals such as barley and canary seeds, bakery products, cocoa and cocoa preparations, sesame and poppy seeds, and processed food products such as fruit pulp, juices and jams will also benefit.In line with India’s existing FTA approach, agricultural market access has been structured based on product sensitivity, including immediate duty elimination, phased elimination of up to 10 years, tariff reduction, margin of preference and tariff rate quota mechanisms.Highly sensitive agricultural sectors remain fully protected under an exemption category. These include meat, poultry, dairy products, GM food products, soyameal, maize and cereals.For select sensitive products, tariff reduction has been applied to maintain measured duty protection. Examples include plant parts, olives, pyrethrum and oil cakes.Certain highly sensitive items have been liberalised under tariff rate quotas (TRQs), allowing limited quantities at reduced duties. These include in-shell almonds, walnuts, pistachios and lentils.Phased tariff elimination of up to 10 years has been offered for certain intermediate food processing inputs sourced from multiple countries, including albumins, coconut oil, castor oil, cotton seed oil and plant derivatives.“Immediate duty elimination has been offered only for select non-sensitive products that are already liberalised under other FTAs,” it said.

Industrial goods and digital trade framework

For industrial goods, the agreement secures zero additional duty access for exports valued at $38 billion, the government said.India will get zero reciprocal duty access in key industrial categories including gems and diamonds, platinum and coins, clocks and watches, essential oils, inorganic chemicals, paper articles, plastics, wood products and natural rubber.Market access for American industrial goods has been structured strictly based on product sensitivity, combining immediate tariff elimination, phased reduction of up to 10 years and quota-based access.In digital trade, India’s digitally delivered services exports stood at $0.28 trillion in 2024, growing 10.3 per cent year-on-year.India ranks fifth globally in digitally delivered services exports and eleventh in imports, while the US ranks first in both categories.“A structured digital trade framework between the two countries reduces regulatory uncertainty, lowers compliance friction and facilitates smoother cross-border service delivery,” the government said.