3 months ago
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The announcements by some U.S. President Donald Trump and Prime Minister Narendra Modi that the U.S. volition trim “reciprocal” tariffs connected India from 25% to 18% are a large alleviation to Indian exporters, and bespeak relations betwixt the 2 countries are connected the mend, aft a twelvemonth of terrible tensions.
India-U.S. commercialized woody LIVE
A U.S. Embassy spokesperson besides confirmed that a 25% punishment tariff imposed connected India past August, which had pushed full tariffs to 50%, the highest connected immoderate state successful the satellite on with Brazil, has present been dropped.
“Out of relationship and respect for Prime Minister Modi and, arsenic per his request, effectual immediately, we agreed to a Trade Deal betwixt the United States and India, whereby the United States volition complaint a reduced Reciprocal Tariff, lowering it from 25% to 18%,” Mr. Trump announced first, adding successful a lengthy societal media post, that India had agreed to respective measures, including stopping Russian lipid imports, trim tariffs and non-tariff barriers “to Zero”, and buying U.S. goods including vigor of much than $500 billion.
In his response, Mr. Modi did not notation to immoderate of the conditions mentioned by Mr. Trump, nor did helium springiness details of the commercialized deal.
“Delighted that Made successful India products volition present person a reduced tariff of 18%. Big acknowledgment to President Trump connected behalf of the 1.4 cardinal radical of India for this fantastic announcement,” Mr. Modi said successful a post. “When 2 ample economies and the world’s largest democracies enactment together, it benefits our radical and unlocks immense opportunities for mutually beneficial cooperation,” helium added.
The determination connected slashing U.S. tariffs, which was made during External Affairs Minister S. Jaishankar’s sojourn to Washington to be a Critical Minerals Ministerial meeting, and a fewer weeks aft U.S. Ambassador Sergio Gor arrived successful Delhi, came aft a telephone telephone betwixt the 2 leaders, and has been welcomed by some governments and concern chambers successful some countries.
“Our astonishing narration with India volition beryllium adjacent stronger going forward. Prime Minister Modi and I are 2 radical that GET THINGS DONE, thing that cannot beryllium said for most...” Mr. Trump continued.
However, respective differences stay betwixt Mr. Trump’s mentation of the statement and Mr. Modi’s version, which volition request to beryllium reconciled.
1. Where is the U.S.-India commercialized deal?
Mr. Trump’s notation to a commercialized woody leaves it unclear whether helium is referring to a woody implicit cutting reciprocal tariffs oregon to the larger “first tranche” of the India-U.S. Free Trade Agreement (FTA) that has been negotiated betwixt commercialized teams aft PM Modi’s sojourn to Washington successful February 2025. As a effect of the FTA, some sides were expected to driblet tariffs, but nary details of the FTA, which includes tariffs and non-tariff barriers, marketplace entree and investments, person frankincense acold been released by either government. Unlike the EU-India FTA concluded past week, the contours of the last India-U.S. agreement, the negotiated text, person not been disclosed.
Further, Mr. Trump’s assertion that India would “reduce Tariffs and Non-Tariff Barriers against the United States, to ZERO”, has not been confirmed by New Delhi, nor has determination been an mentation connected which lines would trim to zero. In addition, the question implicit marketplace entree particularly successful cultivation sectors similar soyabean and dairy, which India has been reluctant to open, remains unanswered. In January, U.S. Commerce Secretary Howard Lutnick had said that a woody had been prepared months ago, but couldn’t beryllium implemented arsenic helium claimed PM Modi didn’t marque a telephone telephone to Mr. Trump to clinch it. The MEA had denied the claim.
2. Will 18% resoluteness India’s disadvantage successful the region?
The reciprocal tariff complaint imposed by the U.S. successful April 2025 of 25% had been a treble stroke for Indian exporters due to the fact that it was higher than its determination rivals, Bangladesh and Vietnam (20%), Pakistan (19%) and China (34%, but overmuch of it was delayed until November 2026). The caller reciprocal tariff complaint of 18% is frankincense a invited step, successful peculiar for apparel manufacturers, and gems and jewellery exporters who had been the worst deed by the tariffs. However, it indispensable beryllium remembered that each of India’s neighbours and immoderate of its Asian rivals besides person a peculiar GSP (Generalised System of Preferences) concession of astir 5%, which the U.S. withdrew from India successful June 2019, during Mr. Trump’s archetypal tenure, and hence Indian exporters had hoped for a reciprocal tariff complaint of astir 15%.
3. What happens to India’s imports of Russian Oil?
In his station connected Monday (February 2, 2026), Mr. Trump said that PM Modi had “agreed to halt buying Russian Oil, and to bargain overmuch much from the United States and, potentially, Venezuela”, adding that this would assistance extremity the warfare successful Ukraine. The MEA has not responded to requests for remark connected this issue. While the authorities insists that it has nary portion to play successful these commercialized decisions, Mr. Trump’s connection that PM Modi had agreed to cutting Russian lipid contradicts it.
In a connection connected August 6, 2026, the MEA spokesperson had issued a connection slamming U.S. punishment tariffs of 25% for India’s acquisition of Russian oil, calling them “unfair, unjustified and unreasonable”, and asserting that lipid imports are based connected “market factors” with the nonsubjective of ensuring vigor information for Indians. India’s acquisition of Russian oil, that reached a highest successful 2024, continued unabated for the adjacent fewer months. However, successful October, Indian refiners began to chopped Russian Ural lipid orders, astir 38% from the erstwhile twelvemonth successful October, and past successful December.
“India’s Russian crude imports recorded a crisp 29% month-on-month simplification to the lowest volumes since the implementation of the terms headdress policy,” European Centre for Research connected Energy and Clean Air (CREA) said. On January 6, 2026, Reliance Industries, 1 of India’s biggest refiners, said successful a connection that it would not person immoderate lipid from Russia successful January 2026, and had not received immoderate Russian lipid successful the past 3 weeks.
4. Is India bowing to U.S. sanctions?
In 2019, India had likewise “zeroed out” its imports of Iranian and Venezuelan oil, aft Mr. Trump had threatened sanctions, and sent U.S. Ambassador to the UN Nikki Haley to Delhi to publically property the point. After the kidnapping of Venezuelan President Maduro by U.S. forces successful January this year, Mr. Trump has indicated the U.S. would “allow” countries to import Venezuelan oil. This whitethorn beryllium a alleviation for India, but raises questions implicit its autonomy connected important strategical decisions similar vigor procurement.
The U.S. has besides threatened to enforce 25% tariffs connected countries “doing business” with Iran, which includes India, and has decided to retreat its sanctions waiver connected Indian concern successful Iran’s Chabahar port. Government sources indicated India is prepared to springiness up its “minimal levels” of commercialized with Iran alternatively than look much tariffs. The Union fund presented connected February 1 besides shows nary allocation for Chabahar successful the upcoming year, indicating the Modi authorities is preparing to backmost distant from the 23-year project, astatine slightest until the threats of U.S. sanctions ease.
5. How overmuch has India committed to investing successful the U.S.?
In his post, Mr. Trump said that Mr. Modi besides “committed to “BUY AMERICAN,” astatine a overmuch higher level, successful summation to implicit $500 BILLION DOLLARS of U.S. Energy, Technology, Agricultural, Coal, and galore different products”. Mr. Trump had likewise claimed that the European Union, Japan and respective others had committed to investments of implicit $500 cardinal arsenic well, aft announcing commercialized deals with them. The MEA declined to remark connected whether specified a committedness has been given, but the size of the fig indicates this is meant to beryllium done implicit respective years, and with aggregate sectors involved. Remember, India-U.S. bilateral commercialized successful goods stands astatine astir U.S. $131 billion, and India’s concern successful the U.S. has hovered astir U.S. $40 billion.
