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Washington, D.C. | February 2 — The United States and India on Monday finalised a wide-ranging trade and energy agreement that lowers U.S. tariffs on Indian goods to 18% and includes India’s commitment to halt purchases of Russian crude oil.
The announcement was made by U.S. President Donald Trump following a call with Indian Prime Minister Narendra Modi, bringing months of negotiations to a close after trade tensions escalated last year.
Under the deal, Washington will roll back steep duties imposed on Indian exports, including a punitive tariff linked to India’s continued imports of Russian oil. In return, India has agreed to diversify its energy sourcing, increase purchases from the United States, and reduce trade barriers on American goods.
Tariffs Rolled Back After Months of Pressure
The Trump administration had previously raised tariffs on Indian exports to as high as 50%, citing concerns that India’s discounted crude purchases from Russia were indirectly supporting Moscow amid the war in Ukraine. Of that total, 25 percentage points were specifically tied to India’s Russian oil trade.
With the new agreement, the U.S. will immediately lower the effective tariff rate on Indian goods to 18%, providing relief to exporters across sectors including manufacturing, technology, pharmaceuticals and financial services.
Energy Commitments at the Core of the Deal
A central pillar of the agreement is India’s pledge to end imports of Russian oil. India, the world’s third-largest crude importer, had become the largest buyer of Russian seaborne oil after Western sanctions were imposed on Moscow in 2022.
According to U.S. officials, India will significantly increase imports of American energy products and may also explore purchases from other suppliers, including Venezuela, as part of its transition away from Russian crude.
President Trump said India has also committed to substantially expanding purchases of U.S. energy, technology, agricultural products, coal and other goods over the coming years, a move aimed at narrowing the bilateral trade gap.
Confirmation From Both Leaders
Prime Minister Modi confirmed the agreement in a post on X, welcoming the reduced tariff rate for Indian goods and describing the deal as a boost for economic cooperation between the two democracies. He said closer U.S.–India ties would unlock new opportunities for trade, investment and growth.
Trump, in his remarks, said both sides had agreed to move toward reducing tariffs and non-tariff barriers, calling the agreement a step toward a stronger long-term partnership.
Markets and Diplomacy
The deal comes at a time when Indian markets have faced pressure from higher trade barriers and global uncertainty. Analysts said the rollback of tariffs could help restore investor confidence and stabilise export-driven industries.
The agreement also follows India’s recent trade pact with the European Union, underscoring New Delhi’s push to deepen economic ties with major global partners.
A Strategic Reset
U.S. officials have previously indicated that pressure on India over Russian oil imports had begun to show results, with refinery purchases declining in recent months. The new agreement formalises that shift, linking trade incentives with energy and geopolitical objectives.
While implementation details are still emerging, the deal marks one of the most significant resets in India–U.S. economic relations in recent years, aligning trade, energy security and strategic interests.