India and US Seal a Trade Deal

• 03 Feb 2026
• 75 Views

India and the United States sealed a trade deal. Under the deal, Washington will significantly reduce its tariff on Indian goods from the current 50 percent to 18 percent. In exchange, India has agreed to stop purchasing oil from Russia and to lower its trade barriers, US President Donald Trump said. 

He had announced the deal on social media after having a call with Indian Prime Minister Narendra Modi. He noted that India would now purchase oil from the United States and possibly from Venezuela. Prime Minister Modi expressed his happiness and stated that ‘Made in India’ products will now benefit from the reduced tariff of 18 percent. 

He said, “Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18 per cent. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement." 

He further said that when two large economies and the world's biggest democracies collaborate, it benefits the people and unlocks immense opportunities for mutually beneficial cooperation.

According to a Reuters report, the US agreed to lift a punitive 25 percent duty on all imports from India. This duty had been imposed due to India's purchases of Russian oil. This original tariff was in addition to an existing 25 percent "reciprocal" tariff rate. Prime Minister Modi also made a pledge that India would "buy American" at an increased level. 

This commitment by India includes purchasing more than $500 billion worth of US energy resources, including coal as well as technology, agricultural products and other goods as stated by Trump on social media. The US President also mentioned that India would also work towards reducing their tariffs and non-tariff barriers against the United States to zero.

Prior to Trump's return to office, which involved raising US tariff rates to double digit levels last year, India had maintained some of the world's highest tariffs. According to World Trade Organization data, India had an avg applied tariff rate of 15.6 percent and an effective applied tariff of 8.2 percent.

Comparison of the India-US Deal with Other Nations

After the new trade deal between the US and India, India is now among the nations with some of the lowest tariff rates from the Donald Trump administration compared to other major Asian economies like China, Pakistan, Indonesia, Bangladesh and Vietnam. However, the duties imposed by the US on trade with India are slightly higher than those applied to its European partners as well as Japan and South Korea. 

Countries facing the highest tariffs from the US include these countries: Brazil (50%), Myanmar (40%), Laos (40%), China (37%) and South Africa (30%). In Southeast Asia, countries subjected to higher duties consist of Vietnam (20%), Bangladesh (20%), Pakistan (19%), Malaysia (19%), Cambodia (19%) and Thailand (19%).

Nations that have secured the lowest tariff agreements are the United Kingdom (10%), the European Union (15%), Switzerland (15%), Japan (15%) and South Korea (15%).

Source: NDTV