- India and the US agreed to reduce reciprocal tariffs on Indian imports from 25% to 18%
- The trade deal takes effect immediately, offering tariff relief to Indian products in the US
- India will increase purchases of US energy, technology, agriculture, and coal products
India and the United States have "agreed to a trade deal", which will reduce the reciprocal tariffs on Indian imports to 18% from 25%, President Donald Trump said, following a phone call with Prime Minister Narendra Modi.
The trade deal will be "effective immediately", Trump said, signalling immediate tariff relief for India.
India was earlier paying a whopping 50% tariffs that included 25% penalty for buying Russian oil. But now, the tariffs have been slashed to 18% in total as confirmed by US Embassy.
"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, whereby the United States will charge a reduced reciprocal tariff, lowering it from 25% to 18%. They will likewise move forward to reduce their tariffs and non-tariff barriers against the United States, to zero," he said.
Trump's statement came shortly after a phone call with Modi.
"The Prime Minister also committed to “Buy American” at a much higher level, in addition to over $500 billion of US Energy, Technology, Agricultural, Coal, and many other products. Our amazing relationship with India will be even stronger going forward. Prime Minister Modi and I are two people that get things done, something that cannot be said for most. Thank you for your attention to this matter! (sic)".
Trump, in his social media post, claimed that Modi agreed to "stop buying Russian oil", and "buy much more from the United States and, potentially, Venezuela". The two leaders also discussed on ending the war in Ukraine, he added.
Shortly after Trump's statement, Modi also took to X to confirm the finalisation of the trade deal with the US. "Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18%. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement. When two large economies and the world's largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation," he said.
Notably, the two sides have been locked in negotiations since early 2025, but the talks derailed after the US slapped tariffs as high as 50% on Indian imports in August. After a brief pause, the negotiations resumed in October, but the two countries could not reach the finish line.
Representatives of New Delhi and Washington are engaging in "robust negotiations", and remain in regular touch as the discussions continue, the persons privy to the development added.
The Modi-Trump phone call also comes days after US Treasury Secretary Scott Bessent signalled that half of the tariffs imposed on India—25% levies—could be waived as India has significantly trimmed its import of Russian crude oil.
“We put 25% tariffs on India for buying Russian oil, and the Indian purchases by their refineries… have collapsed," Bessent told Politico on the sidelines of World Economic Forum in Davos. "I would imagine there is a path to take them off,” he added.
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