India and the United States have agreed to a trade deal, US President Donald Trump announced on Monday.
US Ambassador to India Sergio Gor said that US tariffs on Indian products will now be reduced to 18% from the existing 50%.
President Trump had earlier broken the news of the tariff cuts on Truth Social.
The announcement followed a thirty-minute phone call between Trump and Prime Minister Narendra Modi.
After the tariff cut, India now stands below neighbours such as China, Pakistan and Bangladesh, as well as several other countries including Cambodia, Canada, Indonesia, Vietnam and Mexico on the tariff ladder.
In a post on Truth Social, Trump posted, "It was an Honor to speak with Prime Minister Modi, of India, this morning. He is one of my greatest friends and, a Powerful and Respected Leader of his Country."
Modi also took to X to say,"Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18%. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement."
"When two large economies and the world’s largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation," Modi added.
In the post, Modi further said that Trump’s leadership is vital for global peace, stability, and prosperity and that India fully supports his efforts for peace.
"I look forward to working closely with him to take our partnership to unprecedented heights," the post read.
The deal with the US comes days after India announced the "mother of all deals" with the European Union.
In the Truth Social post, Trump added that the two leaders spoke of many things including trade, and ending the war with Russia and Ukraine.
Trump claimed that India has agreed to stop purchasing Russian crude oil.
"He agreed to stop buying Russian Oil, and to buy much more from the United States and, potentially, Venezuela. This will help END THE WAR in Ukraine, which is taking place right now, with thousands of people dying each and every week!" he said.
"Out of friendship and respect for Prime Minister Modi and, as per his request, effective immediately, we agreed to a Trade Deal between the United States and India, whereby the United States will charge a reduced Reciprocal Tariff, lowering it from 25% to 18%," the post further read.
He added, "They will likewise move forward to reduce their Tariffs and Non Tariff Barriers against the United States, to ZERO. The Prime Minister also committed to “BUY AMERICAN,” at a much higher level, in addition to over $500 BILLION DOLLARS of U.S. Energy, Technology, Agricultural, Coal, and many other products."
Trump said that the "amazing relationship with India" will be more strong going forward.
"Prime Minister Modi and I are two people that GET THINGS DONE, something that cannot be said for most," the post read.
Experts have suggested that Sergio Gor helped in fast-tracking the trade deal.
After Trump announced the trade deal, Gor said in a post that the relationship between the two countries has limitless potential.
"As I have said many times, President Trump genuinely considers Prime Minister Modi a great friend! Thrilled by the news of the trade deal this evening," the post read.
Calling it a "A big win for a consequential partnership," Indian Ambassador to the US, Vinay Mohan Kwatra, said that the deal would "create vast new opportunities for the two economies and the people of our two great nations"
"Today’s announcements herald an exciting new phase in our partnership," he added.
Union Industries Minister, Piyush Goyal said, "This agreement unlocks unprecedented opportunities for farmers, MSMEs, entrepreneurs, and skilled workers to Make in India for the world, Design in India for the world, and Innovate in India for the world. It will help India get technology from the US."
He added that this was “not just a trade deal” and said “it is a historic turning point that will reshape India–U.S. relations and accelerate our journey towards Viksit Bharat 2047.”
Following the announcement, India’s equity market is all set to open with significant gains on Tuesday.
The announcement of the deal sent GIFT Nifty soaring by more than 800 points, or 3.2 per cent, to hit a high of 25,962.50.
The sharp surge in GIFT Nifty reflects an immediate repricing of risk, driven by expectations of improved trade competitiveness, lower input costs for exporters, and stronger bilateral economic alignment between the two countries.
Earlier, in a brief post on X, Gor made the announcement of the telephonic conversation.
In the post, he said, “President Trump just spoke with Prime Minister Modi.”
Gor did not share any details about the conversation between the two leaders, but ended the tweet with a cryptic, “STAY TUNED…”
The announcement took place on a day External Affairs Minister S Jaishankar began a three-day visit to Washington.
According to the MEA, Jaishankar is travelling to attend a Washington-led ministerial meeting on the critical minerals supply chain.
India-US ties had come under severe stress after Trump doubled tariffs on Indian goods to 50 per cent, including an additional 25 per cent duty over India’s purchase of Russian crude oil.
Relations further deteriorated over other issues, including Trump’s claim that he ended the India-Pakistan conflict in May last year and Washington’s new immigration policy.
Official sources said last week that India and the US had made “very significant” progress in negotiations on the trade deal.
Last month, Trump had greeted India on the occasion of its Republic Day, saying, “On behalf of the people of the United States, I extend my heartfelt congratulations to the government and people of India as you celebrate your 77th Republic Day.”
He added that the two nations “share a historic bond as the world’s oldest and largest democracies.”