India and U.S. Poised for Historic Trade Deal: Major Tariff Cuts and Reduced Russian Oil Imports on the Horizon

India and U.S. Edge Closer to Trade Agreement with Major Tariff Reductions and Shift in Russian Oil Imports

India and the United States move toward a new trade deal. This deal links United States efforts to cut tariffs on Indian exports with India’s plan to lower its Russian oil buys. Mint reports that both sides set terms that tie tariff cuts with reduced oil imports.

Proposed Tariff Cuts and Market Access

Tariffs sit at about 50% on Indian products in the U.S. market. The deal would bring these rates down to near 15% or 16%. This drop cuts the cost barrier for Indian goods and opens a larger U.S. market. India may also raise its quota for non-genetically modified corn. The current cap of 0.5 million tonnes each year might be lifted. Both countries talk over a regular review process to track these changes.

Reduction in Russian Oil Imports

A main focus rests on India’s Russian oil imports. Today, India is the world’s second-biggest buyer. Daily imports have grown from 50,000 barrels in 2020 to about 1.6 million barrels in early 2025. This rise comes as tension grows in Ukraine. In a phone call, former President Trump said Prime Minister Modi promised to reduce Russian oil buys. Trump warned that India would face heavy tariffs until it cuts these imports. Modi confirmed the call, yet he did not clearly discuss the oil issue. Instead, he pointed to their joint work against terrorism. India’s Foreign Ministry repeats that the nation seeks affordable energy during these volatile times. They stress that any drop in Russian oil must go with a plan that holds the energy supply.

Background and Strategic Considerations

U.S. pressure now pushes India toward a new oil policy. In August, Trump added a 25% tariff penalty on Indian goods. This move pushed tariffs to a full 50%. India’s ties with Russia have long been close. Meetings between Modi, President Putin, and President Xi in Beijing have added extra weight. U.S. officials see the oil policy as key to cutting Moscow’s funds amid the Ukraine conflict.

Next Steps and Outlook

Both sides work to set the main points of the trade deal. Sensitive subjects like agriculture and energy still need more talk. The final deal may come at the ASEAN summit later this month. It remains unclear if Trump or Modi will join the meeting.

Summary of Key Points

U.S. tariffs on Indian exports may drop from 50% to around 15%-16%.
India may cut its Russian oil buys gradually while keeping energy stable.
India might boost its non-GMO corn imports from the U.S.
Discussions continue on agriculture access and energy policy.
The final deal could be announced at the ASEAN summit in October.

Both countries build trade links that connect immediate tariff relief with long-term energy policy changes. This path may boost trade while they work through complex issues.

This article will be updated as more information becomes available.

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