India has emerged with a significant trade advantage over key Asian competitors after New Delhi and Washington finalised a new trade deal that cuts US tariffs on Indian goods to 18 per cent from as high as 50 per cent. The agreement, announced by US President Donald Trump following a phone call with Prime Minister Narendra Modi, places India on more favourable terms than countries such as China, Pakistan, and Bangladesh in the American market.

Under the deal, the US has agreed to rescind a punitive 25 per cent duty imposed on Indian imports over New Delhi’s purchases of Russian crude oil. This duty had been stacked on top of a 25 per cent “reciprocal” tariff, sharply raising costs for Indian exporters. In return, India has committed to reducing trade barriers and significantly increasing purchases of US energy, agricultural products, and technology.

Prime Minister Narendra Modi welcomed the agreement, saying he was “delighted” that made-in-India products would now face a reduced tariff of 18 per cent. He described the deal as a boost for domestic manufacturing and said closer cooperation between the world’s two largest democracies would unlock immense opportunities for mutual economic growth.

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In comparative terms, the new tariff rate gives India a clear edge over several regional peers. China continues to face tariffs of around 37 per cent, while Bangladesh and Vietnam are levied at 20 per cent and Pakistan at 19 per cent. This improved positioning is expected to enhance India’s competitiveness in export-heavy sectors such as textiles, leather, gems and jewellery, and light manufacturing.

However, India’s tariff rate remains slightly higher than those enjoyed by US allies such as the European Union, Japan, and South Korea, which face duties of around 15 per cent. Countries with even lower tariffs include the United Kingdom at 10 per cent. Still, analysts say India’s relative advantage over emerging-market competitors could lead to a meaningful shift in supply chains towards Indian exporters.

Key details of the deal remain unclear. The US administration has yet to issue a formal proclamation outlining timelines, enforcement mechanisms, or the deadline for India to halt Russian oil purchases. Neither side has released a full text of the agreement, leaving open questions about concessions on agriculture, technology transfer, and investment commitments. Despite the uncertainties, the announcement has already been hailed as a strategic breakthrough that strengthens India’s position in the global trade landscape.

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