Donald Trump on Monday announced a trade deal with India to reduce tariffs to 18% from 50%, in exchange for halting Russian crude oil purchases and easing trade restrictions. This significant move to ease tariffs has sparked a rally across Asian countries’ markets. Even though the details of the deal are not yet clear, sentiment among exporters and policymakers is beginning to lift.
According to Indian Government officials, India agreed to purchase defence goods, petroleum, and aircraft from the US, while gradually opening up its guarded agricultural sector under the agreement. Another Indian official said that New Delhi would provide Zero tariffs on industrial goods entering the country from the US.New Delhi also agreed to reduce the tariffs on imported cars to meet Washington’s demands.
After the final agreement is signed, both nations will share details, India’s Trade Minister Piyush Goyal said on Tuesday, underscoring that a joint statement will be issued soon. Trump said India would purchase the most goods from the US, including energy, coal, technology, and agricultural products, with potential purchases totalling more than $500 billion, without specifying a timeframe.
“India’s tariff agreement with the U.S. removes its earlier disadvantage versus peers,” said Neelkanth Mishra, chief economist at Axis Bank. He added that the deal significantly influences Indian gems and jewellery, leather, plastics, ceramics, and auto components, as well as non-tech foreign investment.
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S.C. Ralhan, president of the Federation of Indian Export Organisations, said on Tuesday that “Lower tariffs will not only improve price competitiveness but also help Indian exporters integrate more deeply into U.S. supply chains”.
