Highlights
- US and India agree to a trade deal cutting tariffs on Indian goods to 18 per cent.
- Trump claims Modi promised to stop buying Russian oil; Modi does not mention this.
- Additional 25 per cent tariff linked to Russian oil purchases to be dropped.
- Indian markets rise, with the Nifty index up almost five per cent at the open.
US PRESIDENT Donald Trump said the United States and India have agreed to a trade deal that will reduce tariffs, saying Prime Minister Narendra Modi had also promised to stop buying Russian oil over the war in Ukraine.
Trump said tariffs on Indian goods would be cut to 18 per cent. The United States had earlier imposed 25 per cent “reciprocal” tariffs on several Indian products, along with an additional 25 per cent linked to India’s purchase of Russian oil.
The announcement followed months of differences over India’s oil imports from Russia, which Washington says help fund the conflict in Ukraine. Trump has described Modi as “one of my greatest friends.”
While Modi thanked Trump for the easing of tariffs after what he described as a “wonderful” phone call, he did not refer to Trump’s claim about halting Russian oil purchases.
“Out of friendship and respect for Prime Minister Modi and, as per his request, effective immediately, we agreed to a Trade Deal between the United States and India,” Trump said in a post on Truth Social.
Trump said the United States would lower the reciprocal duty imposed on India during his waves of global “Liberation Day” tariffs last year from 25 per cent to 18 per cent.
A White House official told AFP that an additional 25 per cent tariff Trump had imposed on India in August over its purchase of Russian oil would also be dropped.
Trump said Modi “agreed to stop buying Russian Oil, and to buy much more from the United States and, potentially, Venezuela. This will help END THE WAR in Ukraine.”
The United States has effectively been overseeing Venezuelan oil exports since toppling the country’s leader, Nicolas Maduro, in a military operation in January.
Trump said India had also agreed to buy more than $500 billion in US energy, technology, agricultural, coal and other products, without providing further details.
Indian markets reacted to the announcement, with Mumbai’s Nifty index rising almost five per cent at the open.
‘The Russia question’
Modi was among the first leaders to visit the White House after Trump returned to the presidency a year ago, but talks on a trade deal stalled over India’s Russian oil purchases.
In December, Russian President Vladimir Putin said during a visit to New Delhi that Russia was prepared to continue “uninterrupted shipments” of fuel to India despite pressure from the United States.
Trump said in October that Modi had promised to stop buying Russian oil, but no agreement was reached at that time.
“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,” Modi said in a post on X on Monday.
Modi did not mention oil purchases.
Tanvi Madan, senior fellow at the Brookings Institution’s Center for Asia Policy Studies, said a recent EU-India accord may have influenced Trump’s announcement.
“It is possible that the Indian trade agreement with the EU... incentivised Washington to get to yes,” Madan told AFP.
She said the “devil will be in the details” regarding the sectors that will benefit from the deal.
“For India the Russia question remains,” said Farwa Aamer, director of South Asia initiatives at the Asia Society Policy Institute.
“Even though it has and will change its oil import structure away from Russia, India would still want to keep relations steady,” Aamer said.
India became a major buyer of Russian oil after the start of the Ukraine war, offering Moscow an export market after Europe sharply cut purchases.
In 2024, Russia supplied nearly 36 per cent of India’s total crude imports, or about 1.8 million barrels of discounted oil per day.
Modi also said that “President Trump’s leadership is vital for global peace, stability, and prosperity.”
Trump has repeatedly claimed credit for ending the brief conflict between India and Pakistan in May.
(With inputs from agencies)
