This guide describes the early-February 2026 US-India interim deal (an 18% reciprocal rate). After the Supreme Court struck down IEEPA on February 20, 2026, India — like nearly all countries — moved to the flat 10% Section 122 rate. The 18% and competitor figures below are historical; IEEPA tariffs paid in 2025 are now refundable. Estimate your India-import refund →
February 2026 brought significant changes to India's tariff situation. The reciprocal rate was reduced from 25% to 18% under an interim trade agreement, and the Russian oil tariff was terminated. For importers of Indian goods — especially pharmaceuticals, textiles, gems, and jewelry — these changes create new opportunities. Here's what you need to know.
What Changed in February 2026
Two major changes took effect: On February 7, 2026, the Russian oil tariff (25% on petroleum products) was terminated. Separately, the US-India interim trade agreement reduced India's reciprocal tariff rate from 25% to 18% — a 7 percentage point reduction. Additionally, some designated products now qualify for 0% reciprocal duties under the agreement, though the full list of qualifying products is still being finalized. These changes represent the first concrete results of ongoing US-India trade negotiations.
Impact on Key Import Categories
Pharmaceuticals: India is the world's largest supplier of generic drugs to the US. The reduction from 25% to 18% provides meaningful relief for pharmaceutical importers and could moderate drug price increases. Textiles and apparel: Indian garments become more competitive at 18% compared to Bangladesh (37%), Vietnam (46%), and Cambodia (49%). This could accelerate a shift in sourcing. Gems and jewelry: India is a major diamond cutting and jewelry manufacturing hub. The reduced rate improves competitiveness against competitors. Agricultural products: Indian spices, tea, and food products benefit from the lower rate.
Comparison with Competing Countries
When the US-India interim deal was signed in early February 2026, India's 18% rate was significantly more competitive than many Asian rivals: India (18%) vs. China (~45% effective with Section 301), Bangladesh (37%), Vietnam (46%), Indonesia (32%), and Thailand (36%). That gap has since collapsed. After the Supreme Court struck down the IEEPA reciprocal tariffs on February 20, 2026, India, Bangladesh, Vietnam, Cambodia, Indonesia, and Thailand all moved to the flat 10% Section 122 rate. India's earlier 18% advantage no longer applies — sourcing decisions now turn on labor cost, lead time, and Section 301/232 exposure (China still carries Section 301; USMCA Mexico remains 0%). The 18% and competitor rates above are historical and refer to the pre-SCOTUS IEEPA period.
Products Qualifying for 0% Duties
The interim agreement includes a provision for designated products to qualify for 0% reciprocal duties. While the complete list is still being finalized, early indications suggest certain pharmaceutical ingredients, medical devices, and agricultural commodities may qualify. Importers should work with their customs brokers to identify whether their specific products are included as the designations are published. This 0% rate applies only to the reciprocal tariff — MFN base rates and any applicable Section 232 tariffs still apply.
Future Outlook: Full Trade Deal
The February 2026 changes are part of an interim agreement. Full US-India trade deal negotiations are ongoing, with the potential for further tariff reductions. Key issues under negotiation include: India's market access barriers for US agricultural products, intellectual property protections (especially for pharmaceuticals), digital trade rules, and defense procurement. A comprehensive deal could lower rates further or expand the list of 0% duty products. However, negotiations are complex and a full agreement is likely months away.
Key Takeaway
India's tariff briefly dropped from 25% to 18% under an interim deal in early February 2026 — but after the Supreme Court struck the IEEPA reciprocal tariffs on February 20, 2026, India and its Asian rivals (Bangladesh, Vietnam, Cambodia) all moved to the flat 10% Section 122 rate. India's earlier advantage no longer applies; sourcing now turns on labor cost, lead time, and Section 301/232 exposure (China still carries Section 301).
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