India and US Set to Finalize Trade Deal with Significant Tariff Cuts

The government of India is poised to announce a joint statement regarding the India-US Free Trade Agreement (FTA) this week, according to sources from the Indian government. The announcement comes as negotiations approach their final stages, indicating a significant step forward in trade relations between the two nations.

During a telephone conversation on Monday night, Prime Minister Narendra Modi and President Donald Trump agreed on a substantial reduction in tariffs on Indian goods. Under the new terms, tariffs will decrease to 18% from the previous rate of 25%. This development is part of a broader trade deal, which includes India committing to purchase over $500 billion in American products encompassing energy, technology, agriculture, and more.

In remarks following the conversation, Trump referred to Modi as one of his “greatest friends” and emphasized that both leaders are capable of achieving significant outcomes. He stated that India has also agreed to halt purchases of Russian oil, opting instead to increase imports from the United States and potentially Venezuela.

Union Commerce Minister Piyush Goyal expressed optimism about the deal, asserting that it would be a point of pride for every Indian. Goyal highlighted that the agreement would safeguard sensitive sectors, particularly agriculture and dairy, while unlocking vast opportunities for labor-intensive industries. Key sectors expected to benefit include textiles, plastics, apparel, home decor, leather, footwear, gems and jewelry, organic chemicals, rubber products, machinery, and aircraft components.

The forthcoming trade deal marks nearly a year since India and the United States began formal negotiations during Modi’s visit to America in February 2025. Over the past year, the two countries conducted six formal rounds of discussions alongside numerous informal meetings aimed at finalizing the agreement. Recent efforts included a delegation led by Deputy US Trade Representative Rick Switzer, who visited India in December 2025 as part of the ongoing negotiations.

As both nations prepare for the formal announcement of the trade deal, the economic implications are expected to resonate across various sectors, strengthening bilateral ties and enhancing trade flows significantly. The finalization of this agreement could reshape the landscape of trade not only between India and the US but also within the broader global market.