India, US near long-awaited trade deal linking tariff cuts to reduced Russian oil imports
If the latest reports are to be believed, India and the US are close to finalising a long-pending trade deal that could significantly reshape their economic relationship and signal a deeper strategic alignment on global energy and geopolitical issues.
Washington is reportedly prepared to slash tariffs on Indian exports from about 50 percent to 15–16 percent, in exchange for India’s commitment to gradually reduce its dependence on Russian crude oil.
Once confirmed, this would mark the most substantial trade breakthrough between the two nations in recent years, after a prolonged period of tariff disputes and stalled negotiations.
The deal is expected to be formally announced during an upcoming meeting between US President Donald Trump and Indian Prime Minister Narendra Modi, possibly at the ASEAN summit later this month.
Sources suggest the proposed agreement includes reciprocal concessions. The US would provide tariff relief for Indian goods such as textiles, pharmaceuticals, and engineering products, while India would offer greater market access for select US agricultural exports, including corn and soymeal. Both sides are also exploring cooperation in clean energy and critical technology supply chains.
The timing of the deal reflects a mix of strategic and economic calculations. For Washington, the move serves both commercial and geopolitical objectives. By encouraging India to diversify away from Russian oil, the US seeks to tighten global enforcement of sanctions on Moscow while deepening its strategic partnership with New Delhi. India currently imports about one-third of its crude from Russia, making it a key target in Washington’s efforts to reduce Russian export revenues.
For India, the potential tariff reduction offers a significant economic incentive. Lower duties on Indian exports would help restore competitiveness in the US market and boost trade volumes in key sectors. After years of tariff escalation under the “reciprocity” principle, a rollback to pre-dispute levels could provide much-needed relief to exporters and support India’s manufacturing and “Make in India” ambitions.
However, the agreement is not without challenges. Analysts point out that while India may agree to scale back Russian oil purchases, a rapid withdrawal is unlikely given the pricing advantages and long-term supply contracts with Russian refiners. New Delhi will need to balance geopolitical expectations with domestic energy security and cost considerations.
On the domestic front, India may also face political resistance over opening up sensitive sectors such as agriculture and dairy to US products. Similarly, American lawmakers and trade groups could demand stronger intellectual property protections and market reforms before fully endorsing the deal.
Implications
If implemented, the trade pact could mark a turning point in U.S.–India relations, transforming their engagement from a transactional trade relationship into a deeper strategic partnership. For Washington, it strengthens economic ties with a key Indo-Pacific ally amid its ongoing rivalry with China. For India, it offers a chance to expand export opportunities, diversify energy imports, and reinforce its global economic standing.
The agreement could also reshape regional trade dynamics. Other nations may see this as a template for linking trade benefits to strategic cooperation, a trend that could redefine global trade diplomacy in the coming years.
While neither government has officially confirmed the final terms, expectations are rising that the deal will be announced soon. Key details—such as the exact tariff coverage, timelines for implementation, and India’s schedule for reducing Russian oil imports—remain under negotiation.
If both sides manage to overcome domestic and political hurdles, the trade deal could signal not just an economic reset but a strategic realignment, where tariffs, energy, and geopolitics converge in one of the most consequential trade partnerships of the decade.
