India and the United States on Monday announced a landmark trade deal following a phone call between Prime Minister Narendra Modi and U.S. President Donald Trump, marking a clear thaw in bilateral ties after months of tariff-related tensions.
Under the agreement, Washington will cut tariffs on Indian goods to 18% from 25% and scrap the additional 25% penalty imposed earlier over India’s purchases of Russian crude oil. Trump said New Delhi had agreed to stop buying Russian oil and would move to reduce tariffs and non-tariff barriers on U.S. goods to zero.
The deal is seen as a major boost to trade relations between the two countries, which are targeting bilateral trade of $500 billion by 2030. Market participants expect the agreement to lift sentiment for Indian equities and the rupee, while export-oriented sectors such as textiles, apparel and seafood are likely to be key beneficiaries.
Modi welcomed the announcement, saying reduced tariffs on Made in India products would unlock immense opportunities for mutually beneficial cooperation between the world’s two largest democracies. Commerce and Industry Minister Piyush Goyal called the pact a historic turning point, saying it would open new opportunities for farmers, MSMEs, entrepreneurs and skilled workers, while accelerating India’s progress towards Viksit Bharat 2047.