India-US Trade Deal Finalized

After prolonged negotiations, India and the United States finalized a trade deal reducing tariffs on Indian imports from 25% to 18%. This agreement was announced by US President Donald Trump on Truth Social and confirmed by Prime Minister Narendra Modi.

Key Concerns and Unanswered Questions

• Zero Tariffs:
  While Modi mentioned only the tariff reduction, Trump claimed India agreed to zero tariffs and to significantly increase purchases of American goods. However, clarity on whether zero tariffs apply universally, especially in sensitive sectors like agriculture, remains lacking.
• American Agricultural Exports:
  Trump suggested increased Indian purchases of US agricultural products, but details on US imports of Indian produce were not provided. Previously, talks stalled over agricultural import duties, with Modi vowing not to compromise on farmers' interests.
• Russian Oil Purchases:
  Trump stated Modi agreed to cease Russian oil purchases, favoring US and potentially Venezuelan oil. However, Modi did not mention this publicly. India has been reducing Russian oil imports, which dropped to their lowest in two years by December 2025. The transition poses challenges, including loss of discounts and supply replacement.
• India’s Services Exports:
  The Trump administration's stricter immigration policies, such as the increased H-1B visa fee, complicate hiring Indian professionals, impacting services exports. The services sector, a focus in India’s other trade agreements, was not discussed in the deal announcements.

While the deal addresses key political objectives, unresolved economic questions remain, requiring further commitments, legal texts, and timelines to ensure tangible benefits and avoid postponing crucial trade decisions.