India and US close to 15% tariff deal

India and US close to 15% tariff deal

India and the U.S. are close to a trade deal cutting American tariffs on Indian goods to 15–16% from 50%, possibly linked to reduced Russian oil imports.

India, U.S. Edge Closer to Landmark Trade Deal as Modi and Trump Discuss Energy, Tariffs, and Global Stability

In a significant diplomatic development, India and the United States appear to be on the verge of finalizing a long-pending trade agreement that could reshape economic ties between the two democracies. According to a report by Mint, Washington is considering slashing tariffs on Indian imports to around 15%–16%, down from the current 50%. The move, if finalized, would mark a major thaw in the trade relationship that has faced several hurdles over the past few years.

The agreement reportedly covers key sectors like energy and agriculture, reflecting the growing strategic alignment between the world’s largest and oldest democracies. However, the potential deal also carries deeper geopolitical implications—particularly for India’s energy imports from Russia, which have increased substantially since the start of the Ukraine conflict.

A Phone Call Between Leaders

U.S. President Donald Trump confirmed on Tuesday that he spoke with Indian Prime Minister Narendra Modi, with the conversation largely centered around trade. This assurance could play a pivotal role in advancing the trade deal, as Washington continues to press global partners to reduce their reliance on Russian energy exports.

Prime Minister Modi also acknowledged the conversation, though he refrained from sharing specific details. Taking to X (formerly Twitter), Modi thanked President Trump for his warm Diwali greetings, adding a symbolic touch of friendship and cultural respect to the diplomatic exchange.

The exchange, coming during the Diwali season—a time that celebrates the victory of light over darkness—seemed to carry a broader message about the strength of Indo-American ties amid an increasingly uncertain global landscape.

What’s on the Table

According to Mint, the trade negotiations involve sensitive discussions around agricultural products and energy security. As part of the talks, India may allow increased imports of non-genetically modified U.S. corn and soymeal—a long-standing demand from Washington that could open new opportunities for American farmers while diversifying India’s food supply chain.

In exchange, the United States would significantly reduce tariffs on Indian exports, making Indian goods more competitive in the American market. Sources cited by Mint suggest that the agreement could also include a mechanism to review tariffs and market access periodically, ensuring that both sides can adapt to changing economic and geopolitical realities.

If finalized, the trade pact could be officially announced at the upcoming ASEAN Summit later this month, signaling a fresh phase of cooperation between New Delhi and Washington.

The Broader Context

This potential agreement is not just about tariffs and trade. It reflects the evolving dynamics of global power. As India seeks to balance its long-standing ties with Russia and its growing partnership with the United States, it faces a delicate diplomatic tightrope.

Washington, meanwhile, views India as a key partner in counterbalancing China’s influence in the Indo-Pacific region. A stronger economic relationship could further deepen strategic and defense cooperation, reinforcing the shared vision of a “free, open, and prosperous” Indo-Pacific.

Economic and Political Impact

For India, the reduction of U.S. tariffs could provide a major boost to its manufacturing and export sectors, especially textiles, pharmaceuticals, and machinery. It could also attract more foreign investment, supporting Prime Minister Modi’s Make in India initiative. For the U.S., increased access to India’s massive consumer market—one of the fastest-growing in the world—could help American businesses diversify supply chains and reduce dependence on China.

Beyond economics, the warmth of the Diwali exchange between Modi and Trump hints at a continued personal rapport between the two leaders. While both countries have had disagreements on issues like digital taxation, agricultural standards, and visa policies, the overarching trajectory of U.S.-India relations remains positive.

A Festival of Lights and Diplomacy

As the world celebrated Diwali, the symbolic festival of light conquering darkness, the conversation between Trump and Modi served as a reminder of the enduring spirit of cooperation that defines India-U.S. relations. Both nations, bound by democratic values and a shared commitment to global stability, appear ready to take another major step forward—one that could bring economic growth, strategic strength, and renewed optimism to both sides.

If the deal is sealed in the coming weeks, it may well stand as one of the most consequential trade agreements between India and the United States in recent history—proof that diplomacy, like Diwali, can illuminate even the most complex corners of international relations.