New Delhi / Washington: In a major recalibration of bilateral economic ties, the United States and India have announced a new trade understanding that significantly lowers U.S. tariffs on Indian goods and could reshape energy trade between the two countries.
U.S. President Donald Trump said the deal—unveiled after a phone call with Indian Prime Minister Narendra Modi—will reduce reciprocal U.S. tariffs on Indian exports to 18%, down from around 25%, and roll back additional punitive levies imposed last year.
Trump also claimed India has agreed to halt purchases of Russian crude oil and expand procurement of U.S. energy and other products, forming part of a broader economic package that he pegged at as much as $500 billion.
Prime Minister Modi confirmed the tariff reduction on social media, saying India welcomes “immense opportunities for mutually beneficial cooperation.”
However, the Indian government did not publicly confirm commitments regarding Russian oil purchases, zero tariffs on U.S. goods, or the $500 billion procurement figure outlined by Trump.
Key Elements of the Deal
Tariff Adjustment:
– U.S. reciprocal tariffs on Indian goods are now set at 18%, effective immediately, providing relief to exporters who faced levies as high as 50% after punitive measures last year.
Russian Oil Claims:
– Trump said India agreed to “stop buying Russian oil” and instead increase purchases of U.S. and Venezuelan crude—a claim that New Delhi has not publicly affirmed.
Market Access and Purchases:
– The U.S. side asserts India will reduce tariffs and non-tariff barriers on American goods to zero and significantly expand imports of U.S. energy, technology, agricultural and coal products, though details remain unverified by Indian authorities.
Economic and Market Reaction
The announcement triggered a sharp market rally in India. The Indian benchmark Nifty 50 index jumped nearly 3%, while the rupee strengthened to its highest levels in months, reflecting investor relief after months of tariff-related headwinds. Analysts say the deal may restore foreign investor confidence and ease the drag on export-oriented sectors like textiles, chemicals and engineering goods.
The agreement caps nearly a year of strained economic diplomacy following U.S. tariffs imposed in August 2025 on Indian goods over energy and trade disputes. By recalibrating duties and potentially shifting energy sourcing, both capitals are signaling a reset in economic and geopolitical cooperation—particularly amid broader Western efforts to reduce Russia’s energy revenues linked to the war in Ukraine.
Officials in both capitals are expected to begin technical negotiations on implementing tariff schedules, refining product-by-product details, and clarifying energy procurement commitments. Traders and industry groups are seeking a formal treaty text to assess sector-specific impacts and legal certainty.