India and the US are set to sign a trade deal cutting reciprocal tariffs to 18% and boosting energy, tech and goods trade as both nations aim for $500B by 2030.
India and the US are set to sign a trade deal cutting reciprocal tariffs to 18% [Photo: X]
India and the United States are gearing up to sign a major trade agreement as soon as next week that could reshape economic ties between the world’s two largest democracies. Under the pact, the US will cut reciprocal tariffs on Indian goods to 18 per cent, and India will expand purchases of US products in energy, technology and other sectors as part of a plan to boost bilateral trade to potentially $500 billion by 2030.
The deal also entails changes to oil import policy, contentious political debate and new opportunities for Indian exporters. Government officials say the agreement will be formally signed early next week in India, with senior US officials expected to attend. Commerce Minister Piyush Goyal has indicated an official joint statement will follow soon.
Despite the positive economic signals, opposition parties have criticised the deal for lack of transparency and unanswered questions about implementation timelines and strategic decisions.
The India-US trade deal is a negotiated agreement aimed at increasing two-way commerce and reducing barriers to trade between the two countries. At its core, the pact will lower the US reciprocal tariff on Indian exports from higher rates down to 18 per cent, alleviating pressure on Indian goods entering the US market.
In return, India has agreed to open certain sectors to greater US participation and scale up purchases of US energy products, technology equipment and other goods. The agreement is seen as a foundational step toward a broader bilateral trade relationship.
The tariff reduction is expected to boost exports from sectors including engineering goods, auto components, textiles, electronics, chemicals and leather products.
One of the most notable elements of the deal is the tariff change:
Reciprocal tariff cut: The US will charge a reduced tariff of 18 per cent on Indian imports, compared with earlier rates that went up to 50 per cent — a combination of base tariffs and penalty tariffs related to oil imports.
Market access commitments: India has signalled willingness to lower certain non-tariff barriers and potentially expand imports of US goods, including energy, defence, telecommunications and advanced technology products.
Oil import shift: The US has indicated that India will reduce purchases of Russian oil — a move described as part of the trade understanding, although India’s official policy will prioritise national energy strategy.
These elements are expected to improve India’s export competitiveness while deepening economic integration with the US
Indian government sources have emphasised that sensitive sectors like agriculture, dairy and fisheries will remain protected from sudden market pressures. Officials assert that farmers’ interests and livelihoods tied to these sectors have been carefully shielded during negotiations.
Farm groups and political leaders have flagged concerns about potential access given to US agricultural products, but government representatives maintain that any changes will be limited and phased to avoid disruption.
The announcement triggered heated debate in Parliament and among opposition parties, which criticised the government for not providing details ahead of public statements by foreign leaders. Disruptions in legislative proceedings underscored the strong political feelings surrounding the deal.
Opposition critics questioned why details on tariff implementation, timelines and energy sourcing had not been disclosed earlier, especially regarding India’s purchases of oil and alternative sources should policy shift.
Government sources have indicated that senior US officials will visit India later this week or early next week for the formal signing of the trade deal. Following the signing, a joint statement will provide more specifics on terms, implementation phases and sector-specific commitments.
While specific dates for tariff implementation and other regulatory adjustments have not been formally announced, officials expect details to be rolled out in official notifications soon after the signing.
Analysts suggest that the tariff cut and broader commitments could unlock new export opportunities for Indian businesses that had struggled under higher tariff barriers. Lower reciprocal tariffs could help India better compete against other Asian exporters in key American markets.
For consumers, the deal could translate into greater availability of US products and technologies. Some industries — like manufacturing, engineering, and MSMEs — may benefit from easier access to US supply chains and investment.
However, certain sectors such as agriculture might face heightened competition from imported goods in the long term, which has sparked debate about the need for phased or protective measures.
This trade deal is broadly seen as a first step toward a more comprehensive bilateral trade agreement. Officials from both sides have hinted at future negotiations aimed at strengthening economic cooperation, which could further expand trade well beyond the current framework.
For now, the focus remains on finalising the text, issuing clarifications, and setting up implementation structures to achieve the ambitious goal of reaching $500 billion in bilateral trade by 2030.
