UPSC Prelims Practice Questions — U.S. tariff on India cut to 18%, say Modi, Trump

Q1. With reference to the India–United States trade framework announced in February 2026, consider the following statements: 1. Immediately before the framework, Indian exports to the United States faced a combined additional duty of 50%, made up of a 25% reciprocal tariff and a separate 25% penalty linked to India's Russian crude oil purchases. 2. Under the new framework, the reciprocal tariff on Indian goods was lowered from 25% to 18%, and the additional 25% Russia-linked penalty was withdrawn through a U.S. Executive Order. 3. The framework concluded in February 2026 is a full Free Trade Agreement (FTA) covering goods, services and investment between India and the United States. Which of the statements given above is/are correct?

1. Immediately before the framework, Indian exports to the United States faced a combined additional duty of 50%, made up of a 25% reciprocal tariff and a separate 25% penalty linked to India's Russian crude oil purchases.
2. Under the new framework, the reciprocal tariff on Indian goods was lowered from 25% to 18%, and the additional 25% Russia-linked penalty was withdrawn through a U.S. Executive Order.
3. The framework concluded in February 2026 is a full Free Trade Agreement (FTA) covering goods, services and investment between India and the United States.

• A. 1 and 2 only
• B. 2 and 3 only
• C. 1 and 3 only
• D. 1, 2 and 3

Q2. In the context of the February 2026 India–United States joint statement on trade, the term 'Mission 500' refers to which one of the following?

• A. A target to expand bilateral India–U.S. trade in goods and services to USD 500 billion by 2030
• B. India's commitment to import 500 million barrels of U.S. crude oil annually in place of Russian crude
• C. A joint India–U.S. defence procurement programme worth USD 500 million covering critical technologies
• D. A U.S. concession reducing reciprocal tariffs to 5% on 500 categories of Indian goods

Q3. Within the Government of India, the negotiation and implementation of the February 2026 India–United States interim trade agreement (the 'first tranche' of the Bilateral Trade Agreement) is primarily led by which one of the following ministries?

• A. Ministry of External Affairs
• B. Ministry of Commerce and Industry
• C. Ministry of Finance
• D. Ministry of Petroleum and Natural Gas

Q4. With reference to the February 2026 India–U.S. interim trade framework, consider the following categories of Indian exports to the United States: 1. Textiles and apparel 2. Leather and footwear 3. Crude petroleum 4. Organic chemicals Which of the above is/are correctly identified as categories explicitly covered by the new 18% reciprocal tariff rate as per the U.S. announcement?

1. Textiles and apparel
2. Leather and footwear
3. Crude petroleum
4. Organic chemicals

• A. 1 and 2 only
• B. 2 and 4 only
• C. 1, 2 and 4
• D. 1, 2, 3 and 4

Q5. With reference to India's commitments under the February 2026 India–U.S. interim trade framework, consider the following: 1. Elimination or reduction of Indian tariffs on a wide range of U.S. industrial goods and agricultural products 2. Cessation of imports of crude oil from the Russian Federation 3. Purchase of more than USD 500 billion worth of U.S. energy, technology and agricultural products 4. India's accession as the fourth member of the U.S.–Mexico–Canada Agreement (USMCA) Which of the above is/are NOT correct?

1. Elimination or reduction of Indian tariffs on a wide range of U.S. industrial goods and agricultural products
2. Cessation of imports of crude oil from the Russian Federation
3. Purchase of more than USD 500 billion worth of U.S. energy, technology and agricultural products
4. India's accession as the fourth member of the U.S.–Mexico–Canada Agreement (USMCA)

• A. 1 and 2 only
• B. 2 and 3 only
• C. 3 and 4 only
• D. 4 only