What Happened
- India and the United States announced a framework for an Interim Trade Agreement on February 6, 2026, following negotiations launched during the Modi-Trump summit in February 2025.
- The deal reduces US reciprocal tariffs on Indian goods from 25% to 18% under Executive Order 14257, while India commits to eliminating or reducing tariffs on a wide range of US industrial goods and agricultural products.
- India has made a $500 billion purchase commitment over five years covering US energy products, aircraft, precious metals, technology products, and coking coal.
- A key condition involves India committing to cease purchasing Russian Federation oil, in exchange for the US removing the additional 25% punitive tariff on Indian goods.
- Critics argue the deal is one-sided, with India making disproportionate concessions that could undermine its strategic autonomy, trade policy flexibility, and non-alignment posture.
Static Topic Bridges
WTO Framework and Most-Favoured Nation (MFN) Principle
The India-US interim trade deal operates outside the WTO's multilateral framework, raising questions about its compatibility with WTO rules. The MFN principle (GATT Article I) requires WTO members to extend the same tariff treatment to all trading partners, with exceptions only for free trade agreements (under GATT Article XXIV) or special and differential treatment for developing countries.
- GATT Article I (MFN): Any trade advantage given to one WTO member must be extended to all members — bilateral tariff reductions outside an FTA framework could violate this principle.
- GATT Article XXIV: Allows members to form customs unions or free trade areas, provided they cover "substantially all trade" and do not raise barriers to non-members — the interim deal may not meet this threshold.
- The US imposed tariffs on India using the International Emergency Economic Powers Act (IEEPA), an executive authority not subject to WTO dispute settlement in the same way as Section 301 tariffs.
- India's weighted average applied tariff (MFN): approximately 13.8% (2023), compared to the US average of approximately 3.3% — the tariff gap is a persistent US grievance.
- India lost its Generalised System of Preferences (GSP) benefits in June 2019 (covering $6.3 billion of exports), which the US revoked citing market access concerns.
Connection to this news: The interim deal's bilateral nature and the use of executive orders (rather than Congressional trade authority) raises questions about its WTO legality and durability, while the linkage between trade concessions and foreign policy demands (ceasing Russian oil imports) represents an unprecedented mixing of trade and geopolitical conditionality.
India's Strategic Autonomy and Non-Alignment 2.0
India's foreign policy since independence has been anchored in strategic autonomy — the ability to make independent policy choices without being constrained by alliance obligations. The evolution from Nehruvian non-alignment to contemporary "multi-alignment" has allowed India to maintain relationships with both the US and Russia simultaneously.
- Non-Alignment Movement (NAM): Founded at Bandung (1955) and formally established at Belgrade (1961); India was a founding member alongside Yugoslavia, Egypt, Indonesia, and Ghana.
- "Non-alignment 2.0" (2012 policy paper by Sunil Khilnani et al.) advocated strategic autonomy while deepening engagement with all major powers — the conceptual framework guiding India's current approach.
- India-Russia energy ties: India became a major buyer of discounted Russian crude after Western sanctions (2022), importing approximately 1.7-2.0 million barrels per day in 2025 — making Russia India's largest crude oil supplier.
- The condition to stop purchasing Russian oil in exchange for US tariff relief represents the first explicit instance of a trade deal being conditioned on India's foreign policy alignment — a fundamental challenge to multi-alignment.
- QUAD (India, US, Japan, Australia), I2U2 (India, Israel, UAE, US), and BRICS (expanded in 2024) represent India's strategy of participating in multiple overlapping groupings without exclusive alignment.
Connection to this news: The trade deal's conditionality linking tariff treatment to Russia policy represents a structural challenge to India's multi-alignment doctrine, potentially setting a precedent for future bilateral deals where trade access is tied to geopolitical alignment.
India-US Trade Relationship — Structure and Trajectory
The India-US economic relationship has grown significantly over the past two decades, with bilateral goods and services trade crossing $200 billion. However, persistent irritants around tariffs, market access, intellectual property, and agricultural subsidies have prevented a comprehensive trade agreement.
- India-US bilateral goods trade: approximately $120 billion (2024-25); services trade: approximately $90 billion — total exceeding $200 billion.
- US trade deficit with India: approximately $45 billion (2024) — a persistent US concern.
- Key US demands: market access for dairy products (which India restricts on food safety and religious grounds), medical devices (price controls), agricultural imports (GMO regulations), and intellectual property protection (especially pharmaceuticals).
- Key Indian demands: restoration of GSP benefits ($6.3 billion in exports affected since 2019), H-1B visa reforms, technology transfer, and recognition of India as a market economy.
- India's protected sectors not included in the interim deal: dairy, rice, wheat, specific grains, comprehensive spices, and select frozen vegetables.
- The full Bilateral Trade Agreement (BTA) is targeted for completion by late 2026 or 2027.
Connection to this news: The $500 billion purchase commitment over five years represents a significant structural shift in the trade relationship, moving from traditional tariff negotiations to large-scale purchase agreements that could lock India into long-term import dependencies.
Key Facts & Data
- US reciprocal tariff on India: reduced from 25% to 18% under the interim deal
- India's purchase commitment: $500 billion over 5 years (energy, aircraft, technology, coking coal)
- India's weighted average MFN tariff: approximately 13.8% vs US average of approximately 3.3%
- India-US bilateral trade: exceeds $200 billion (goods + services)
- US trade deficit with India: approximately $45 billion (2024)
- India's GSP benefits revoked: June 2019, covering $6.3 billion in exports
- India's Russian crude imports: approximately 1.7-2.0 million barrels/day (2025)
- Full BTA target: late 2026 or 2027