India-US Announce Landmark Trade Deal

On 2nd February 2026, India and the United States announced a major breakthrough in bilateral trade ties, with US President Donald Trump confirming a tariff-reduction agreement following a phone call with Prime Minister Narendra Modi.

Key Points

Tariff Reduction Agreement: The United States agreed to reduce reciprocal tariffs on Indian goods from 25% to 18% with immediate effect, providing Indian exports a significant competitive advantage.
Indian Market Access Commitments: India agreed in principle to eliminate or substantially reduce tariffs and non-tariff barriers on selected US products, including easing licensing, regulatory and certification restrictions.
Energy and Strategic Purchases: As part of the understanding, India will purchase over $500 billion worth of US energy, technology, agricultural products, coal and other goods over time.
Competitive Export Edge: India’s revised 18% tariff rate is lower than those imposed on other Asian economies, including China at 37%, Bangladesh at 20% and Pakistan at 19%.
Diplomatic Context: The announcement came a week after India and the European Union concluded a comprehensive Free Trade Agreement, reinforcing India’s growing centrality in global trade realignments.