The long-awaited US–India trade deal was sealed on Monday night, with US President Donald Trump personally announcing the agreement after a call with Prime Minister Narendra Modi. Emphasising personal diplomacy, Trump said the deal would take effect immediately and would reduce reciprocal tariffs on Indian exports to the US from earlier punitive levels to 18%.
The agreement delivers multiple relief measures for India. Alongside the tariff cut, the US has withdrawn the additional 25% duty imposed over India’s purchase of Russian crude oil, effectively rolling back the sharp tariff escalation announced in August 2025. The move restores certainty for Indian exporters across sectors such as textiles, engineering goods, chemicals and auto components.
Trump also claimed that India would eliminate tariffs and non-tariff barriers on US goods and commit to purchasing over $500 billion worth of American energy, technology, agricultural and coal products. However, the Indian government has not confirmed these figures, and Union Budget 2026 does not outline any fiscal framework or import plan linked to such a massive commitment.
While questions remain over the scale and timing of the proposed purchases, economists and markets view the tariff reduction as a major positive that improves India’s competitiveness, strengthens trade visibility and supports a more stable macro environment following Budget 2026.
