US President Donald Trump announced a trade deal to reduce tariffs on India, sending Mumbai stocks soaring on Tuesday, as he said Prime Minister Narendra Modi had promised to stop buying Russian oil over the war in Ukraine.
Trump said he was cutting levies on Indian goods to 18 per cent. He had previously imposed 25 per cent “reciprocal” tariffs on many products, plus an additional 25 per cent for New Delhi’s purchases of Moscow’s oil.
The deal eases months of tensions over India’s oil purchases — which Washington says fund a conflict it is trying to end — and restores the close ties between Trump and the man he describes as “one of my greatest friends.”
But while Modi thanked Trump for the “wonderful” phone call and the easing of tariffs, he made no mention of Trump’s assertion that he would halt Russian oil purchases.
“Out of friendship and respect for Prime Minister Modi and, as per his request, effective immediately, we agreed to a Trade Deal between the United States and India,” Trump said in a post on Truth Social.
Trump said the United States would lower the reciprocal duty imposed on India during his waves of global “Liberation Day” tariffs last year from 25 per cent to 18 per cent.
A White House official told AFP that an additional 25 per cent tariff Trump had slapped on India in August for its purchase of Russian oil would also be dropped.
Trump added that Modi “agreed to stop buying Russian Oil, and to buy much more from the United States and, potentially, Venezuela. This will help END THE WAR in Ukraine.”
The United States has effectively been overseeing Venezuelan oil exports since toppling the South American country’s leader, Nicolas Maduro, in a military operation in January.
India had further agreed to buy more than $500 billion in US energy, tech, agricultural, coal and other products, Trump said, without giving further details.
Indian investors welcomed the news, sending Mumbai’s Nifty index up almost five per cent at the open.
Modi was one of the first leaders to visit the White House after Trump’s return to the presidency a year ago, but efforts to secure a trade deal had foundered over India’s Russian oil purchases.
As recently as December, Russian President Vladimir Putin said during a visit to New Delhi that he was ready to continue “uninterrupted shipments” of fuel to India despite US pressure.
Trump also said in October that Modi had promised to stop buying Russian oil, but an agreement did not materialise at the time.
“Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18 per cent,” Modi said in a post on X on Monday.
The Indian leader, however, made no mention of oil sales.
A recent EU-India accord may have been a catalyst for the sudden Trump announcement, said Tanvi Madan, senior fellow at the Brookings Institution’s Centre for Asia Policy Studies.
“It is possible that the Indian trade agreement with the EU… incentivised Washington to get to yes,” Madan told AFP.
Madan added that the “devil will be in the details” in the sectors that will get relief under the deal.
For India, “the Russia question remains,” said Farwa Aamer, director of South Asia initiatives at the Asia Society Policy Institute.
“Even though it has and will change its oil import structure away from Russia, India would still want to keep relations steady,” Aamer added.
India emerged as a major buyer of Russian oil after the start of the Ukraine war, providing Moscow with a crucial export market as Europe sharply reduced purchases.
In 2024, Russia supplied nearly 36 percent of India’s total crude imports, around 1.8 million barrels of discounted oil per day.
Modi added, however, that “President Trump’s leadership is vital for global peace, stability, and prosperity.”
Trump has repeatedly claimed credit for ending the brief but intense armed conflict between nuclear-armed neighbours India and Pakistan in May.
AFP
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