WASHINGTON/NEW DELHI, Feb. 2 (GeokHub) — The United States and India have agreed to a new trade framework, slashing U.S. tariffs on Indian goods to 18% and marking a major step in economic cooperation between the two nations. In return, India has committed to reducing its purchases of Russian oil and increasing imports from the U.S. and potentially Venezuela.
President Donald Trump announced the deal following a call with Indian Prime Minister Narendra Modi, describing it as a milestone in bilateral trade relations. Modi welcomed the agreement, highlighting the benefits for Indian businesses and consumers.
The arrangement rescinds a previously imposed punitive duty of 25% on Indian imports over Russian oil purchases, which had stacked on top of a 25% reciprocal tariff. The move is expected to eliminate a disproportionate barrier that had weighed heavily on Indian exporters and weakened the rupee, particularly after tariffs were doubled last year.
Trump also indicated that India would purchase more than $500 billion worth of U.S. energy, technology, agriculture, and other products over time. Both sides plan to reduce remaining trade barriers to zero, further opening markets for American and Indian businesses.
The announcement lifted U.S.-listed Indian companies, with Infosys, Wipro, and HDFC Bank posting notable gains, alongside broader optimism in sectors including semiconductors and artificial intelligence.
While the framework offers broad commitments, details such as the effective dates for tariff reductions, deadlines for ending Russian oil purchases, and the exact scope of product purchases have yet to be formalized. The White House has not issued a presidential proclamation, and both U.S. and Indian officials have yet to provide full specifics.
Economists noted that the deal aligns India’s tariffs with those of other Asian trade partners and may strengthen trade flows. U.S. business groups expressed cautious optimism, though some small business coalitions raised concerns over the impact on American import costs if India fails to fully wean off Russian oil.
The agreement comes shortly after India signed a trade deal with the European Union, which will reduce tariffs on a majority of traded goods while excluding certain agricultural products.
