India’s proposed trade agreement with the US includes a built-in safeguard allowing either side to adjust commitments if the other alters tariff terms, amid increasing US trade uncertainties and potential tariff hikes on Indian exports.
India’s proposed trade agreement with the US is set to keep a built-in safeguard that would let either side adjust its commitments if the other changes agreed tariff terms, according to Moneycontrol and a government official cited by the Free Press Journal. The clause is designed to stop Indian concessions from becoming permanent if Washington later alters its duty structure, even as both governments continue to work towards a wider bilateral deal.
That protection matters because the tariff landscape has become far less predictable than when the February framework was announced. Under that arrangement, India offered to lower or remove duties on a range of US industrial and agricultural goods, while the US agreed to an 18% reciprocal tariff on Indian-origin products, with additional concessions tied to a fuller agreement, Moneycontrol reported. The framework also covered sectors including textiles, leather, footwear, plastics, rubber, organic chemicals, home décor, artisanal goods and some machinery.
The uncertainty is partly driven by other US trade actions that could affect Indian exports. Moneycontrol reported that Indian goods already face an extra 10% tariff under US Section 301 measures linked to forced-labour concerns, while Washington is also examining structural excess capacity that could lead to more duties. Separate US legislation on Russia sanctions could give the president power to impose tariffs of up to 100% on countries that continue buying Russian energy, adding another risk for India.
The pharmaceutical sector faces a further possible hit. According to Moneycontrol, a phased US tariff plan would keep generic medicines exempt for two years before introducing a 100% tariff for one year and 200% thereafter. At the same time, some Indian exports could gain partial relief under Section 232 arrangements, which are normally handled through narrow exemptions or quota-based deals rather than full trade pacts. Moneycontrol said about $5 billion worth of Indian exports could benefit, against more than $8 billion exposed to Section 232 tariffs in 2024, much of it in autos and auto parts. Commerce Secretary Rajesh Agrawal has said both sides remain committed to carrying the February framework forward.
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