US President Donald Trump announced that the United States has reached a trade deal with India following a phone call with Prime Minister Narendra Modi.
Trump claimed that India has halted Russian crude purchases as part of the agreement. He announced that the US has cut tariffs on Indian goods from 25% to 18%, while India agreed to lower tariffs and non-tariff barriers on American products. The 25% penalty on India for buying Russian oil has also been removed, with Trump stating that Modi had agreed to stop Russian oil imports.
PM Modi thanked Trump, calling it a significant announcement for the people of India.
In his post, Trump said he was honoured to speak with Prime Minister Modi, calling him a close friend and respected leader. He said their talks covered trade and efforts to end the Russia-Ukraine war, adding that Modi agreed to stop buying Russian oil and increase purchases from the US and possibly Venezuela. Trump claimed the move would help end the war and said Modi committed to significantly boosting “Buy American” purchases, worth over $500 billion across sectors. He added that, out of friendship and at Modi’s request, the two countries agreed to a trade deal with immediate effect.
Soon after Trump’s announcement, PM Modi thanked him, calling him a dear friend and welcoming the reduced 18 per cent tariff on Made in India products. He said cooperation between the world’s largest democracies would create vast opportunities and praised Trump’s leadership on global peace, adding he looked forward to deepening bilateral ties.
US Ambassador to India Sergio Gor also welcomed the deal, calling the Modi-Trump relationship a genuine friendship with limitless potential. The announcement came after months of negotiations delayed by tariff disputes. Trump also shared multiple posts on Truth Social related to India, including images of India Gate and a magazine cover featuring both leaders.
India’s role in the recent US trade announcement has drawn attention, but details remain unclear. Trump did not specify which agricultural products India would buy, in what quantities, or under what timelines, and there’s no clarity on lower tariffs, Russian oil purchases, or trade barrier reductions. The Indian side did not address Trump’s claim that the PM had committed to halting Russian oil imports or buying US products. Following the remarks, Kremlin spokesman Dmitry Peskov emphasised that the India-Russia strategic partnership remains vital and noted that Moscow had heard no statements from India about stopping Russian oil purchases.
One thing is certain, with these positive developments with the US, the market is likely to see notable changes, including a revival in stocks and growth in exports. However, the true impact will only become clear over time, and it remains to be seen how effectively these measures drive long-term economic gains.
Five strategic trade deals
India has accelerated its trade diplomacy, signing five major deals in 12 months with the UK, EU, Oman, New Zealand, and the US to boost exports, attract investment, and secure supply chains.
The India-US agreement is central to this push, following high-level diplomacy between PM Modi and Trump. In February 2025, they launched formal negotiations on a multi-sector pact with a goal to more than double bilateral trade to around $500 billion by 2030, a target Modi calls “Mission 500.”
The UK deal reduces tariffs on textiles, leather, gems, and IT services, opens financial and legal services to British firms, and creates mobility routes for skilled workers and students, building on a bilateral trade of $56 billion with a goal to double it by 2030.
The EU agreement, dubbed the ‘Mother of all trade deals,’ connects India to a 27-nation bloc of over 440 million consumers. India will gradually cut duties on over 90% of EU goods, including automobiles, machinery, chemicals, and pharmaceuticals, while securing EU market access for textiles, garments, leather, engineering products, and food items. Sensitive sectors like rice, sugar, and certain farm goods remain protected. The pact also covers services, digital trade, investment, and regulatory cooperation, benefiting Indian IT and professional services while opening EU finance, shipping, and green tech sectors.
With Oman, India strengthened energy, logistics, and investment ties, reflecting its strategic engagement in the Gulf, where bilateral trade stands at $12 billion. The New Zealand deal focuses on agri-products, education, and digital trade, giving Indian IT and professional services more access while allowing controlled entry for New Zealand dairy and farm exports; bilateral trade is smaller at $2.5-3 billion but opens a gateway to the Pacific.
These trade deals come as global supply chains shift and geopolitics reshape trade routes. New Delhi aims to position India as a dependable manufacturing and services hub, with the recent US tariff move giving new momentum to this strategy.
