India and the United States of America have taken the first step towards a long-awaited trade deal. The one-page joint statement issued on February 6 offers a preview of the issues that will later expand into a comprehensive bilateral trade agreement, likely running into hundreds of pages.
Public discussion has focused mainly on the tariff cuts, but the statement goes far beyond duties. It signals commitments on economic security, digital trade, regulatory standards, and strategic alignment.
Understanding what the joint statement says on key issues — and where India needs to proceed carefully — will be crucial as negotiations move towards a full agreement.
Regulatory Concessions: The joint statement commits India to address what Washington describes as long-standing regulatory barriers. India will review rules affecting US medical devices, remove restrictive import licensing for ICT goods, consider accepting US or international standards in selected sectors, and address regulatory issues affecting US food and agricultural exports.
In medical devices, the US has long opposed India’s price caps on coronary stents introduced in 2017 to curb excessive mark-ups and keep cardiac treatment affordable. Removing these caps could raise treatment costs in a country where most healthcare spending is out-of-pocket.
The US also wants India to remove regulations that restrict imports of refurbished medical devices. These rules are meant to prevent the dumping of obsolete equipment and protect patient safety; easing them could allow the inflow of second-hand devices with uncertain reliability.
In the ICT and telecom equipment sectors, Washington seeks to remove licensing and testing requirements. India’s certification regime requires telecom equipment to be tested domestically to safeguard cybersecurity and network integrity. Relaxation could weaken these safeguards and even benefit suppliers from third countries since much hardware is sourced from outside the US.
In the food and agriculture sector, the US has challenged India’s sanitary and phytosanitary measures, including dairy safety requirements and fumigation standards. India’s dairy import rules — such as requiring animals not be fed meat or blood products — reflect food safety practices and cultural norms. The US demands are one-sided, as it is not offering to relax its own barriers.
As talks proceed, India must ensure that easing regulatory measures does not compromise safety or regulatory sovereignty.
Digital Trade Rules: The US’s call to remove “discriminatory or burdensome practices” and create clear digital trade rules is aimed at ensuring free access for American tech firms to India’s vast market. India already relies heavily on US technology platforms — from cloud services and operating systems to digital marketplaces. Accepting these proposals could limit the government’s ability to regulate data flows and large tech companies.
The US may also press India to support a permanent WTO moratorium on customs duties on electronic transmissions which India has long opposed. Making the moratorium permanent would remove future flexibility to tax such transactions.
India abolished its digital services tax last year; banning future digital taxes could reduce revenues as more economic activity moves online.
Data governance is another critical issue. The US seeks unrestricted cross-border data flows, which could enable US firms to access Indian data. Negotiators will need to preserve policy space while supporting domestic innovation.
Security Alignment Risks: The joint statement’s reference to both countries strengthening “economic security alignment” suggests cooperation on supply chains, coordinated action against “non-market policies” of third countries, and coordination on investment screening and export controls. In practice, this could align India’s foreign, trade and technology policies with US priorities.
Such an alignment could adversely affect India’s relations with third countries. If Washington restricts China on economic-security grounds, India may face pressure to follow suit.
Alignment with the US on export controls could limit India’s access to dual-use technologies from third countries. At the same time, restrictions affecting Russia could threaten access to discounted crude and fertilisers. Investment screening cooperation may discourage third-country investment in India in electronics, EV supply chains and renewable energy.
For India, which has long pursued strategic autonomy and diversified partnerships, embedding its policy within another nation’s economic security framework carries grave risks. India must opt out of this provision.
Russian Oil Pressure: The joint statement contains no Indian commitment to halt Russian oil imports, yet US communications suggest US tariff relief is partly linked to such a shift. Penalties could be reinstated if India resumes oil imports from Russia. This condition appears only in US statements, not in the agreed joint statement. India’s public silence on the issue probably reflects a balancing act: preserving tariff relief and trade ties while waiting for developments, whether through a US Supreme Court ruling on reciprocal tariffs, an end to the Russia-Ukraine war, or a possible easing of tensions between Washington and Moscow.
$500 Billion Commitment: The joint statement mentions India’s intention to purchase $500 billion worth of US goods over five years. Reaching this target would require imports from the US — currently about $45 billion a year — to more than double, potentially widening the trade deficit. The figure appears aspirational and one-sided. Moreover, most such purchases — aircraft, energy, or machinery — are commercial decisions made by private firms, not the government.
Relief, Not Normalcy: The US has reduced its reciprocal tariff — from 50% to 18% — on Indian goods that account for about 55% of India’s exports to the US. However, standard MFN tariffs still apply on top of this. For example, the US MFN tariff on Indian garments is 12%. Before April 2025, garments were subject to a 12% duty. This was later raised to 62% (50% + 12%) and has now been reduced to about 30% (18% + 12%).
Reciprocal tariffs are country-specific penalties devised by Donald Trump while MFN tariffs are the standard duties applied equally to all trading partners under WTO rules.
Though still high, the US tariff cut provides relief, especially as competitors such as China and Vietnam continue to face steeper penalties. Labour-intensive sectors — including textiles, footwear, chemicals, handicrafts, and marine products — are likely to benefit. Tariffs on the remaining exports are unchanged. Smartphones, medicines, petroleum products, and a few agricultural items remain exempt, while steel and aluminium still face 50% duties.
In return, India is reducing or removing MFN duties on US industrial goods and several agricultural products. Product-wise tariff cut details are awaited.
Since the US accounts for about 20% of India’s exports, and shipments fell by roughly 22% after the tariff shock, the tariff relief is welcome. However, it represents a partial roll back of punitive duties rather than a return to normal trade conditions.
Navigating Strategic Risks: US tariff relief may deliver short-term export gains. Still, commitments on digital rules, regulatory standards, procurement choices, energy sourcing, and alignment on economic security could narrow India’s policy space and complicate ties with key partners. As talks move toward a full bilateral trade agreement, India must navigate these risks carefully.
Ajay Srivastava is the founder of Global Trade Research Initiative