U.S. and India Near Major Trade Agreement With Tariff Reductions and Energy Policy Shifts

Potential Breakthrough in U.S.-India Trade Relations

According to recent reports from Indian media outlet Mint, the United States and India are nearing a significant trade agreement that could substantially reduce tariffs on Indian exports while addressing Washington’s concerns about New Delhi’s energy imports from Russia. Sources familiar with the negotiations indicate that both sides have made substantial progress after months of strained relations.

Potential Breakthrough in U.S.-India Trade Relations
Tariff Reductions and Market Access Provisions
Russian Oil Purchases Become Negotiating Point
Complex Negotiation History
Path Forward and Remaining Challenges

Tariff Reductions and Market Access Provisions

The proposed trade deal could see the U.S. slash tariffs on Indian exports to 15%-16% from the current 50%, according to three unnamed sources cited in the report. This dramatic reduction would represent a major victory for Indian exporters who have faced increased trade barriers since August, when former President Donald Trump imposed additional 25% tariffs as a “penalty” for India’s Russian oil purchases.

Analysts suggest the agreement would also include provisions for India to increase its import quota for non-genetically modified corn from the United States. Currently set at 0.5 million tonnes annually, this quota would be maintained even with a 15% import duty. The report states that both sides are pushing for a mechanism to regularly revisit tariffs and market access arrangements over time.

Russian Oil Purchases Become Negotiating Point

Energy policy has emerged as a central component of the trade discussions, with the United States reportedly seeking commitments from India to reduce its reliance on Russian crude. According to statements made by Trump to reporters aboard Air Force One, Indian Prime Minister Narendra Modi provided assurances during a phone call that New Delhi would scale back Russian oil purchases.

“He’s not going to buy much oil from Russia. He wants to see that war end as much as I do,” Trump reportedly stated, while暗示ing that failure to comply would result in continued “massive” tariffs. Modi confirmed the phone conversation in a social media post but did not explicitly address India’s stance on Russian oil imports., according to market trends

Complex Negotiation History

The trade relationship between the two nations has experienced significant turbulence in recent months. Trade talks initially collapsed earlier this year when India reportedly refused to widen access to its agricultural and dairy sectors. Relations further deteriorated when Modi met with Russian President Vladimir Putin and Chinese President Xi Jinping in Beijing last month, a move interpreted by some analysts as signaling India’s willingness to maintain strong ties with Moscow.

India has become the world’s second-largest buyer of Russian crude since the beginning of the Ukraine conflict, with imports skyrocketing from 50,000 barrels per day in 2020 to 1.6 million barrels per day in the first half of this year, according to the U.S. Energy Information Administration.

Path Forward and Remaining Challenges

The finalization of the trade agreement will likely be communicated to both leaders during the upcoming ASEAN summit, though neither Trump nor Modi has officially confirmed attendance, according to the Mint report. Sources indicate that while the broad contours of the agreement are in place, sensitive areas such as agriculture and energy require political clearance before any official announcement.

Indian officials have previously argued that any plan to reduce Russian oil imports must include measures to stabilize energy markets and address potential supply shortfalls. The country’s foreign ministry spokesperson emphasized last week that India’s import policies are “guided entirely” by the objective of safeguarding Indian consumer interests in a volatile energy scenario.

Bilateral trade between the two nations reached a record $132.2 billion in the fiscal year ending March 2025, according to data from the India Brand Equity Foundation, representing an increase of more than 10% from the previous year. Both sides had previously agreed to boost bilateral trade to $500 billion by 2030 before negotiations stalled.