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The US and India said they had reached a framework for an interim trade agreement, ending a months-long impasse between Narendra Modi’s government and Donald Trump’s administration.
The confirmation of the agreement came days after Trump spoke to Modi and said India had agreed to stop buying Russian oil, which had prompted his administration to impose a 50 per cent tariff on imports from India.
India will open its market to imports of most US industrial goods and some food products. Indian exports to the US will face an 18 per cent “reciprocal” tariff, according to a joint statement published by New Delhi early on Saturday that sets out more details of the agreement.
India also said it “intends” to increase imports from the US, buying $500bn of energy, aircraft and aircraft parts, metals, technology products, and coking coal over the coming five years. The target would be roughly double India’s current level of imports from the US.
The two sides also agreed to address non-tariff barriers affecting trade, with India vowing to remove “restrictive import licensing procedures”, a longtime irritant in the two countries’ commercial ties.
The US and India last year agreed to work towards a bilateral trade pact during a visit by Modi to Washington, but the talks stalled and both sides’ positions hardened, including over India’s resistance to opening its big agricultural market.
The Trump administration then put a 50 per cent tariff on India, including a 25 per cent levy because of New Delhi’s purchases of Russian oil, which the US said was helping to finance the war in Ukraine.
In an executive order published late on Friday in the US, Trump said India “has committed to stop directly or indirectly importing Russian Federation oil”, committed to buy US energy products, and recently agreed to expand defence co-operation with the US.
The president had “determined to eliminate the additional ad valorem rate of duty imposed on imports” from India, the order said.
The Modi government has not given details of how it will end purchases of oil from Russia. While imports have fallen, Russia remains India’s largest supplier of crude.
“Great news for India and USA!” Modi declared in a post on X. “We have agreed on a framework for an Interim Trade Agreement between our two great nations.” He thanked Trump for his “personal commitment to robust ties between our countries”.
“President Trump’s dealmaking is unlocking one of the largest economies in the world for American workers and producers, lowering tariffs for all US industrial goods and a wide array of agricultural products,” US Trade Representative Jamieson Greer said in a statement.
During the trade talks, India took a hard line on protecting its politically sensitive foodgrain and dairy markets.
However, in the joint statement, India said it would remove or reduce tariffs for a “wide range of US food and agricultural products”, including dried distillers’ grains, red sorghum for animal feed, nuts, fruit, soya bean oil, wine, and spirits.
Piyush Goyal, the commerce minister, said that the understanding with the US would “open a $30tn market for Indian exporters”. He said the agreement with the US would “completely protect” India’s sensitive agricultural and dairy products, including maize, wheat, rice, soya, poultry, milk and cheese.
The breakthrough on trade came after India and the EU concluded a trade agreement last month, the latest of a string of trade deals agreed by New Delhi in a significant opening of its long-protected market.
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