- US President Trump agreed to cut tariffs on Indian goods from 50% to 18%
- Finance Minister Sitharaman said the tariff cut will boost Indian exports to the US
- The reduction restores India’s price advantage over Vietnam and Bangladesh in the US market
US President Donald Trump's decision to slash tariffs on Indian goods to 18 per cent augurs well for the country as it will boost exports, Finance Minister Nirmala Sitharaman said Tuesday.
"So, actually our exports will pick up now, that is my expectation... along with having found new markets where they will continue to operate," she said in an interview to PTI Videos.
"It is a good augury for them (exporters)," Sitharaman said.
Trump's steep 50% tariffs last year dented Indian exports by raising landed costs, squeezing exporter margins, and eroding competitiveness in the American market. Sectors such as steel, aluminium, textiles, engineering goods and some agricultural products were hit as higher duties led US buyers to shift orders to alternative suppliers.
On Monday, Trump agreed to slash US tariffs on Indian goods to 18% from 50% in exchange for India lowering trade barriers as well as stopping its purchases of Russian oil and instead buying oil from the US and potentially Venezuela.
On implementation, the deal would bring tariffs on India in line with most other Asian countries of around 15-19%.
Sitharaman said while the details of the agreement will be announced soon, the cut in tariffs is a "good auguring" for exporters.
Taken together with the new markets exporters had tapped after becoming uncompetitive in the US, the "exports will pick up now," she said.
Earlier punitive US tariffs caused India's bilateral trade surplus with the US to shrink by $2.5 billion each month on average in September-December 2025 (versus the monthly average in January-August 2025), according to HSBC Global Investment Research.
There have also been $14 billion of equity outflows by foreign investors since July 2025 amid weak sentiment.
The new 18% levy undercuts tariffs on key regional competitors such as Vietnam and Bangladesh, both facing duties of 20%, restoring India's price advantage in the US market. The move offers significant relief to a broad range of labour-intensive exports, including apparel, footwear and jewellery makers, which had been hit by punitive 50% tariffs imposed in August, sharply denting competitiveness and order flows.
Earlier in the day, Sitharaman had in a post on X called the tariff reduction announcement "Good news for #MadeInIndia products. They will now face reduced tariff of 18%."
Trump's announcement via a social media post late Monday night is part of a general agreement under which India has apparently agreed to stop buying Russian oil, reduce "their tariffs and non-tariff barriers against the United States to zero", and India buying an incremental $500 billion of "US energy, technology, agricultural, coal, and many other products" over the next five years.
The commitment to stop buying Russian oil nullifies the additional 25% punitive tariff previously levied, and thereby reduces the effective applied tariff on Indian exports to the US to 18% from 50%.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
Comprehensive Budget 2026 coverage, LIVE TV analysis, Stock Market and Industry reactions, Income Tax changes and Latest News on NDTV Profit.
