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More broadly, India must help to revive world trade talks by opening its markets.
The agreement also includes a clause that will temporarily halt the tariff cuts for two years if no deal is reached in multilateral trade talks by 2013.
He also urged India to drop its resistance to the start of a new round of trade talks by the World Trade Organization, in Doha, Qatar, in October.
The leaders also agreed in principle to revive World Trade Organization negotiations on starting another round of global trade talks by the end of this year.
Kamal Nath, India's trade minister, helped kibosh a breakthrough in the Doha round of global trade talks by refusing to compromise over demands for safeguard tariffs to protect more than 200m Indian farmers.
Eager to avoid repeating its humiliating failure in Seattle in 1999, the World Trade Organization moved today to rescue foundering negotiations on a new global round of trade talks by offering concessions to developing-country members.
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It will also harm world-trade talks, by bringing protests that rich America is driving poor countries' farmers to the wall.The matter now moves to the Senate, which is likely to be less generous (though the talk is only of limiting subsidies, not eliminating them).
For the Doha round of trade talks run by the WTO was geared specifically to help poor countries.
Ms Merkel may also raise the Doha world trade talks, scuppered by a row this summer over American farm subsidies.
The Obama administration aims to have the trade talks completed by Dec. 31, a deadline that many of the participants consider optimistic.
EU officials said they wanted the trade talks finished by next year, while Obama pledged that he would ensure a successful pact would not entail any dilution of consumer or environmental standards under pressure from multinational corporations.
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