India and the United States are nearing a long-stalled trade agreement that would reduce US tariffs on Indian imports to 15% to 16% from 50%. The deal, which hinges on energy and agriculture, may see India gradually scale back its imports of Russian crude oil. Reports indicate that the development aligns with Washington's broader geopolitical strategy and follows recent high-level talks between the leaders of the two countries.
The proposed deal, which is reportedly in its final phase, centers on a significant policy exchange. The US is prepared to lower its import duties on various Indian products to a range of 15-16 percent. This is a substantial reduction from the current tariffs, which can be as high as 50 percent. Such a move would provide a major competitive boost to Indian exporters, especially in key sectors like textiles, pharmaceuticals, and engineering goods.
In return for this concession, India is expected to make two key commitments. The most significant is a pledge to gradually reduce its purchase of Russian crude oil. This aligns directly with Washington's long-standing effort to limit Moscow's energy revenues. Secondly, the agreement would open India's protected agricultural market, allowing for higher imports of US products like non-genetically modified corn and soymeal.
Progress on the deal follows recent high-level discussions. A phone call took place earlier between Prime Minister Narendra Modi and President Donald Trump. While the call was officially to exchange Diwali greetings, President Trump told reporters it also focused on trade and energy. India's official response to this claim has been measured. Modi confirmed the call on social media, thanking Trump for the festive wishes. His message concluded with a call for both democracies to "stand united against terrorism in all its forms." He made no public mention of a trade discussion or any agreement on Russian oil. Despite this diplomatic ambiguity, officials familiar with the negotiations are reportedly working to finalize the pact. The goal is to make a formal announcement at the upcoming ASEAN Summit.
If finalised, this agreement would be the most significant breakthrough in bilateral trade relations since talks stalled in 2020 over tariff disagreements. The United States is one of India's largest trading partners, with total trade exceeding $200 billion in recent years. Trade experts believe the deal would be mutually beneficial. It would boost Indian exporters' access to the American market and give US farmers greater access to India's vast consumer base. However, the reported condition on Russian oil places New Delhi in a delicate position.
