India-US Interim Trade Deal to Be Reworked After US Tariff Changes; New Talks with Mexico, UK and Canada
The Union Ministry of Commerce and Industry said the interim trade agreement with the United States will be finalised keeping in mind that "circumstances have changed" since February 2026.
In February 2026, India and the US announced a framework for the first phase of a Bilateral Trade Agreement (BTA). Under it, the US removed the extra 25% penalty tariff linked to India's purchase of Russian oil and cut its tariff on Indian goods to 18%.
On 20 February 2026, the US Supreme Court ruled that the President cannot impose tariffs under the International Emergency Economic Powers Act (IEEPA), striking down the "reciprocal tariffs". On 24 February, the US instead put a blanket 10% tariff on all countries for 150 days under a different law. So the base on which the February framework was built has changed.
India wants lower US tariffs for its goods than its competitors get. Indian and US trade officials met on the sidelines of the G20 trade ministers' meeting in Milwaukee.
India will launch trade talks with Mexico next week. UK and Canadian trade ministers will visit India; the UK visit is for the India-UK Joint Economic and Trade Committee (JETCO). Talks with the Southern African Customs Union (SACU) will start soon, and talks continue with Israel, Chile, the Gulf Cooperation Council (GCC) and the Eurasian Economic Union.
Export figures up to September were described as strong, with India aiming for $1 trillion of total exports (goods and services) this year.
India-US Bilateral Trade Agreement (BTA)
The India-US Bilateral Trade Agreement is a trade deal that India and the United States are negotiating, to cut tariffs (import taxes) and other barriers between them. It is being done in stages, or "tranches", starting with an interim first phase. The US is India's largest export market, so the terms of this deal matter a lot for Indian exporters.
India now wants to finalise the interim deal on terms that reflect the new US tariff situation, especially the aim of getting lower tariffs than competing exporters.
International Emergency Economic Powers Act (IEEPA), 1977
The International Emergency Economic Powers Act, or IEEPA, is a United States law passed in 1977. It allows the US President to control economic dealings with foreign countries, people or companies after declaring a national emergency about an "unusual and extraordinary threat" that comes mainly from outside the US. It is the main legal tool behind most American economic sanctions, like freezing a country's money held in US banks.
The February 2026 India-US framework was built on top of IEEPA-based tariffs. Once the Supreme Court struck them down, the 18% rate India had negotiated was no longer measured against the same baseline, which is why India says the deal must now be finalised keeping the changed circumstances in mind.
- India-US framework for first phase of BTA: February 2026 (released 6 February)
- US tariff on India under the framework: 18%; 25% Russian-oil penalty removed
- US Supreme Court struck down IEEPA tariffs: 20 February 2026
- US blanket tariff under Section 122: 10% for 150 days, from 24 February 2026
- G20 trade ministers' meeting: Milwaukee, USA
- India-UK trade agreement in force: July 2026
- New and ongoing talks: Mexico (launch), Canada, SACU, Israel, Chile, GCC, Eurasian Economic Union
- India's export ambition: $1 trillion this year (goods and services)