Examine what the February 2026 India–US interim trade framework means for India's labour-intensive export sectors, and suggest mitigation measures.

In February 2026, India and the US issued a Joint Statement setting out a framework for an Interim Agreement. Under it, the US applies an 18% reciprocal tariff on Indian goods, and India commits to eliminate or reduce tariffs on US goods [1]. For labour-intensive sectors, this is relief from a far higher rate, but not yet a level playing field.

Implications for labour-intensive sectors

Gains

• Tariff relief: US tariffs on USD 30.94 bn of Indian exports fell from 50% to 18%. Tariffs on another USD 10.03 bn fell to zero [2].
• Market access restored: textiles, leather and footwear regain ground in India's largest trading partner. The US imported USD 87.4 bn of Indian goods in 2024 [3].
• Rural jobs shielded: India gave no tariff concessions on rice, wheat, dairy, poultry and similar farm goods [4].

Concerns

• Uneven relief: textiles, apparel, leather, footwear, home décor and artisanal products still face 18%. Generic pharma, gems and diamonds, and aircraft parts get a zero reciprocal tariff [1]. High-value sectors gain more than the sectors that employ the most people.
• Conditional gains: those exemptions apply only on "successful conclusion" of the Interim Agreement [1]. Exporters face uncertainty until then.
• MSME margin squeeze: small firms with thin margins dominate these sectors, so an 18% duty still makes their prices less competitive.
• Import exposure: India's tariff cuts on US goods [1] may put pressure on some domestic producers.

Mitigation measures

• Negotiate the next tranche: seek lower rates for textiles, leather and handicrafts in the final Bilateral Trade Agreement (BTA).
• Use the Export Promotion Mission (₹25,060 crore, FY26–FY31). It prioritises tariff-hit sectors such as textiles and leather and is aimed at MSMEs [5].
• Diversify markets: use India's FTAs to widen its global presence, as the Commerce Minister urged Export Promotion Councils to do [6].
• Build competitiveness: cut logistics costs, upgrade technology at cluster level, and raise quality standards so exporters can absorb the tariff.
• Support workers: provide reskilling and credit relief in hard-hit clusters to prevent job losses.

Conclusion

The framework turns a punitive 50% tariff into a manageable 18%, but job-intensive sectors still carry the remaining cost. Combining sharper negotiation with Export Promotion Mission support and market diversification can turn this relief into lasting resilience. That would advance SDG 8 (decent work and economic growth) and India's goal of inclusive, export-led growth.