India and the US have reached a new trade deal under which US tariffs on Indian goods would be reduced from 50 per cent to 18 per cent. The agreement includes the withdrawal of a punitive duty imposed over India’s purchases of Russian oil, in exchange for New Delhi halting such imports and lowering trade barriers. Prime Minister Narendra Modi welcomed the move, saying it would boost “Made in India” exports and strengthen bilateral ties. The reduced tariff gives India a competitive advantage over regional rivals such as China, Pakistan and Bangladesh, though the rate remains slightly higher than those offered to US allies like the EU, Japan and South Korea. Key details, including the implementation timeline and formal notification, are yet to be announced.Tariff cut for IndiaFebruary 3, 2026 9:20 amThe United States has agreed to reduce tariffs on Indian goods to 18 per cent from 50 per cent under a new trade deal announced by US President Donald Trump.Punitive duty withdrawnFebruary 3, 2026 9:19 amWashington will rescind an additional 25 per cent punitive duty imposed on India over its purchases of Russian oil, which had been stacked on top of a 25 per cent reciprocal tariff.Key conditionFebruary 3, 2026 9:19 amIn return, India has agreed to halt purchases of Russian oil, lower trade and non-tariff barriers, and increase imports from the United States.Energy shiftFebruary 3, 2026 9:17 amPresident Trump said India would now buy oil and energy products from the US and potentially Venezuela, along with coal and other energy supplies.PM Modi welcomes dealFebruary 3, 2026 9:17 amPrime Minister Narendra Modi said he was delighted that “Made in India” products will now face a reduced tariff of 18 per cent, calling the deal beneficial for both democracies.Edge over Asian rivalsFebruary 3, 2026 9:16 amIndia’s 18 per cent tariff rate is lower than China (37 per cent) and close to or better than Pakistan (19 per cent) and Bangladesh (20 per cent), giving Indian exporters a competitive advantage.Comparison with others:February 3, 2026 9:16 amWhile India’s rate is higher than that of the EU, Japan and South Korea (15 per cent), it remains among the most favourable for major Asian economies.US Imports CommitmentFebruary 3, 2026 9:16 amTrump said India committed to “buy American” at a much higher level, including over $500 billion worth of US energy, technology and agricultural products.Implementation still unclear:February 3, 2026 9:16 amThe start date of the new tariff rates, timeline for ending Russian oil purchases and detailed terms of the agreement have not yet been officially notified.
