India and the United States have reached a significant India U.S. trade deal involving petroleum, defence goods, aircraft, and partial access to India’s protected agricultural sector, a government official confirmed. The agreement comes after months of negotiation and aims to resolve tensions between the two nations.
President Donald Trump announced the deal on Monday, highlighting that U.S. tariffs on Indian goods will fall from 50% to 18%. In exchange, India has agreed to halt Russian oil purchases and reduce trade barriers, while committing to increase purchases of American goods to as much as $500 billion over time, spanning energy, coal, technology, agriculture, and other sectors.
According to an Indian official, India will buy U.S. goods including pharmaceuticals and telecom products, and has offered limited market access for certain agricultural products. This aligns with New Delhi’s earlier partial market access commitments to the European Union. Additionally, India has lowered tariffs on imported cars to meet U.S. requirements for the first phase of the deal.
India’s exports to the U.S. grew 15.88% year-on-year to $85.5 billion from January to November, while imports reached $46.08 billion, according to government data. “The commitment to buy U.S. products covers sectors like pharmaceuticals, telecom, defence, petroleum and aircraft. It will be done over the years,” the official told Reuters. A more comprehensive agreement is expected to be negotiated in the coming months.
The announcement has boosted market sentiment. India’s Nifty 50 index rose nearly 3%, and the rupee strengthened over 1% to 90.40 per dollar during early trading. The reduced 18% tariff rate is lower than that for many Asian peers, with Indonesia facing 19% and Vietnam and Bangladesh 20%.
Industry leaders welcomed the move. “Lower tariffs will not only improve price competitiveness but also help Indian exporters integrate more deeply into U.S. supply chains,” said S.C. Ralhan, president of the Federation of Indian Export Organisations. Moody’s Ratings also noted that the reduction in U.S. tariffs is expected to reinvigorate Indian goods exports to the United States.
The India U.S. trade deal marks a major step in strengthening bilateral economic ties, improving export competitiveness, and providing stability to both markets after months of uncertainty.