India and the United States are advancing toward the finalization of a significant bilateral trade agreement, which is expected to reduce U.S. tariffs on Indian imports from the current levels of up to 50% to approximately 15-16% as reported by Mint, citing three people aware of the matter.. This development, represents a critical step in resolving longstanding trade barriers and could be formally announced at the forthcoming ASEAN Summit later this month. The agreement underscores a renewed commitment to economic cooperation between the two nations, with bilateral trade already exceeding $200 billion in recent years.
The negotiations prioritize the energy and agriculture sectors, areas that have historically posed challenges in U.S.-India trade discussions. A key provision involves India's commitment to progressively decrease its imports of crude oil from Russia, which currently constitute about one-third of the country's total oil requirements. This adjustment supports U.S. objectives to reduce global dependence on Russian energy amid ongoing international geopolitical tensions. In exchange, the United States would substantially lower import tariffs, thereby improving the competitiveness of Indian exports in sectors such as textiles, engineering products, and pharmaceuticals within the American market.
In the agricultural domain, the agreement addresses U.S. concerns regarding access to India's protected markets by facilitating increased imports of non-genetically modified U.S. corn and soymeal. Import quotas would be expanded, and duties reduced to align with the proposed 15-16% tariff framework. This measure would benefit U.S. agricultural producers by providing entry into India's expansive livestock and food processing industries, while offering India more affordable feed resources. Additionally, the pact incorporates mechanisms for periodic reviews of tariffs and market access, ensuring equitable terms and adaptability to future economic conditions.
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Recent diplomatic engagement has accelerated progress on this front. A telephone discussion earlier this week between U.S. President Donald Trump and Indian Prime Minister Narendra Modi focused extensively on trade and energy collaboration. President Trump noted that Prime Minister Modi provided assurances regarding the limitation of oil purchases from Russia. In response, Prime Minister Modi acknowledged the conversation on X, expressing gratitude for Diwali greetings and emphasizing the enduring partnership between the two democracies in promoting global stability and countering terrorism.
This prospective agreement marks the most notable advancement in India-U.S. trade relations since negotiations faltered in 2020 due to tariff disputes. With the United States serving as one of India's primary trading partners—accounting for nearly 25% of its exports in early 2025—the tariff reductions are projected to bolster Indian manufacturing and employment while expanding opportunities for U.S. businesses in India's burgeoning consumer market. However, implementation will require careful navigation of domestic sensitivities, including India's efforts to balance energy security with geopolitical alignments and potential resistance from agricultural stakeholders on both sides.
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