US Revises Interim Trade Deal Fact Sheet With India: Tariff Cuts, Pulses & Digital Tax Changes Explained
- Daksha Jain
- 8 hours ago
- 6 min read
Following months of diplomatic deadlock, Prime Minister Narendra Modi and US President Donald Trump announced the framework for an Interim US-India Trade Agreement on February 6, 2026 — a move that significantly reduces US tariffs on Indian goods from 50% to 18%.
The agreement marks a major shift in bilateral trade dynamics, but subsequent revisions to the White House fact sheet have sparked debate across agriculture, digital policy, energy, and textile sectors.
This article breaks down every change, sectoral impact, financial figure, and geopolitical implication of the 2026 interim trade framework — without leaving out any data.
From 50% to 18%: How India’s Tariff Situation Changed
Until the announcement, India was among the highest tariffed countries in the world, facing a steep 50% US tariff rate.
This included:
25% duty under Trump’s “Liberation Day tariffs”
An additional 25% punitive tariff imposed later due to India’s import of Russian oil
Under the new framework:
The US has reduced tariffs on Indian goods to 18%
President Trump signed an executive order removing the additional 25% tariff
The removal was tied to India’s inclination to diversify energy sources and reduce reliance on Russian oil
The White House fact sheet states:
“President Trump agreed to remove the additional 25% tariff on imports from India in recognition of India’s commitment to stop purchasing Russian Federation oil.”
This represents a major diplomatic breakthrough for New Delhi.
The White House Fact Sheet Controversy: What Changed?
After the February 6 joint statement, the White House released a fact sheet titled:
“The United States and India Announce Historic Trade Deal (Interim Agreement)”
However, the document raised concerns in India due to references to:
Agriculture liberalisation
Sensitive labour-intensive sectors
Digital services taxation
Data sovereignty
Massive US export purchase commitments
On February 7, the White House revised the fact sheet. India’s Ministry of External Affairs (MEA) stated that the amendments reflected a “shared understanding.”
Let’s examine each major change.
Agriculture: Why “Certain Pulses” Was Dropped
Original Language
The original fact sheet said India would:
“Eliminate or reduce tariffs on all US industrial goods and a wide range of US food and agricultural products including dried distillers’ grains (DDGs), red sorghum, tree nuts, fresh and processed fruit, certain pulses, soybean oil, wine and spirits.”
Revised Language
The revised version dropped “certain pulses” entirely.
Why This Matters
India:
Accounts for more than 25% of global demand for pulses
Imports about 20% of its annual pulse consumption
Imported $2.53 billion worth of pulses in the first nine months of FY 2025-26
The US is a minor supplier of pulses to India
The removal of “certain pulses” from the fact sheet was crucial to calm Indian farmers and political stakeholders.
“India Commits” Changed to “India Intends”
One of the most sensitive changes was wording related to US exports.
Original Text:
“India commits to buy $500 billion worth of US goods over five years.”
Revised Text:
“India intends to buy more American products and purchase over $500 billion of U.S. energy, ICT, coal, and other products.”
The difference between “commits” and “intends” carries legal weight.
Trade Data Context:
In FY 2024-25:
India imported $45.62 billion of US goods
India exported $86.51 billion to the US
A $500 billion purchase commitment over five years would imply roughly $100 billion annually, more than double current import levels.
The revised wording softens the obligation.
Equalisation Levy & Digital Sovereignty: What Was Removed?
Original Fact Sheet Claimed:
India would remove digital services taxes
India committed to digital trade rules prohibiting customs duties on electronic transmissions
Revised Version:
Drops the removal clause entirely
States India is “committed to negotiate robust bilateral digital trade rules”
What Is the Equalisation Levy?
Introduced under Finance Act, 2016
Designed to “equalise” taxation between resident and non-resident digital companies
Initially applied to online advertisements
Later expanded to digital services
Key Changes in Recent Years:
Finance Act, 2024 removed the 2% equalisation levy on e-commerce
35th Amendment to Finance Bill, 2025 removed the 6% levy on digital ads
Legal advisers reportedly told the Ministry of Commerce that US demands were unilaterally framed, seeking commitments only from India, not reciprocal restraint.
The revised fact sheet removes explicit tax rollback language — a diplomatic win for India.
Russian Oil & Energy Diplomacy
The tariff reduction is directly tied to energy diversification.
Trump’s executive order states:
Removal of the additional 25% tariff
Recognition of India’s move away from Russian oil
This signals:
Strategic alignment pressure
Energy policy leverage through trade
Textile Sector Impact: India vs Bangladesh
While India secured 18% tariffs, Bangladesh moved swiftly.
On February 10, Bangladesh struck a separate deal with the US:
Zero reciprocal tariffs for a “to-be-specified volume” of textile and apparel exports
19% reciprocal tariff otherwise (down from 20%)
The duty-free volume depends on Bangladesh importing:
US-produced cotton
US man-made fibre textile inputs
Competitive Impact
India faces 18% tariff
Bangladesh faces 19% (or zero on quota)
Earlier tariff differential: 2%
Now reduced to 1%
This puts Indian garment exporters at a competitive disadvantage again.
EU Textile Context (2024 Data):
China: 28% of EU textile imports
Bangladesh: 22%
Turkey: 11%
Vietnam: 6%
India: 5%
Bangladesh is also pushing for an EU Free Trade Agreement after India secured tariff-free exports to the bloc.
Broader Bilateral Trade Agreement (BTA) Still Under Negotiation
The interim agreement is not final.
Both leaders reaffirmed commitment to:
Broader US-India Bilateral Trade Agreement (BTA) negotiations
Continued digital trade discussions
Industrial goods tariff reduction
Agricultural access dialogue
Constitutional, Economic & Strategic Implications
This interim trade agreement:
Reduces tariffs from 50% to 18%
Removes sensitive references to pulses
Softens language on $500 billion purchases
Drops explicit equalisation levy rollback language
Links tariff relief to Russian oil diversification
However, sectoral competition — especially textiles — remains intense.
Breakthrough or Tactical Pause?
The US-India Interim Trade Agreement 2026 marks a significant de-escalation in tariff tensions.
Yet:
Agricultural protections remain sensitive.
Digital sovereignty remains under negotiation.
Energy geopolitics shapes trade outcomes.
Textile competitiveness faces new pressure from Bangladesh.
The broader Bilateral Trade Agreement is still pending.
The interim framework reduces immediate friction but leaves structural trade negotiations open.
FAQs: US Revises Interim Trade Deal Fact Sheet With India
Q. Why did the US revise the interim trade deal fact sheet with India?
Ans. The US revised the interim trade deal fact sheet after concerns were raised in India over sensitive issues such as agricultural imports, digital services tax commitments, and the wording of India’s purchase obligations. The revised version removed references to “certain pulses,” softened language from “India commits” to “India intends,” and dropped explicit mentions of removing digital services taxes.
Q. What is the new US tariff rate on Indian goods under the interim trade agreement?
Ans. Under the revised interim trade framework, the US reduced tariffs on Indian goods from 50% to 18%. The earlier 50% included a 25% Liberation Day tariff and an additional 25% tariff linked to India’s imports of Russian oil. The extra 25% was removed following India’s commitment to diversify energy sources.
Q. Why was “certain pulses” removed from the US fact sheet?
Ans. “Certain pulses” was removed from the revised fact sheet because pulses are a politically sensitive sector in India. India accounts for more than 25% of global pulse demand and imports about 20% of its annual consumption. In the first nine months of FY 2025-26, India imported $2.53 billion worth of pulses. Removing the reference helped ease domestic concerns among farmers and policymakers.
Q. Did India agree to buy $500 billion worth of US goods?
Ans. The original fact sheet stated that “India commits” to buying $500 billion worth of US goods over five years. The revised version changed the wording to “India intends,” significantly softening the legal obligation. In FY 2024-25, India imported $45.62 billion of US goods and exported $86.51 billion to the US.
Q. What happened to India’s digital services tax in the revised agreement?
Ans. The original document suggested India would remove its digital services taxes and avoid imposing customs duties on electronic transmissions. The revised version dropped that language entirely and now states that India is committed to negotiating digital trade rules. This change protects India’s digital sovereignty and policy flexibility.
Q. What is the equalisation levy in India?
Ans. The equalisation levy (EL) was introduced under the Finance Act, 2016 to ensure tax parity between resident and non-resident digital companies. It initially applied to online advertisements and later expanded to e-commerce services. The 2% levy on e-commerce services was removed in 2024, and the 6% levy on digital ads was removed through the 35th amendment to the Finance Bill, 2025.
Q. How does the US-India interim trade deal affect the textile sector?
Ans. Although India secured an 18% US tariff rate, Bangladesh later negotiated a 19% reciprocal tariff and zero tariffs for a specified volume of textile exports. This narrows the tariff gap between India and Bangladesh to just 1%, potentially affecting India’s garment exports and cotton yarn shipments to Bangladesh.
Q. Is this the final US-India trade agreement?
Ans. No. The interim agreement is a temporary framework. Both countries reaffirmed their commitment to negotiating a broader US-India Bilateral Trade Agreement (BTA), which will address tariffs, digital trade rules, agriculture, and energy cooperation in greater detail.
Q. Why was Russian oil linked to US tariffs on India?
Ans. The US had imposed an additional 25% tariff on Indian goods due to India’s continued import of Russian oil. The revised trade framework removed that tariff after India signaled willingness to diversify energy imports.