India–US Trade Deal

On 2nd February 2026, India and the United States announced an important step forward in their trade talks. The agreement came after several months of trade tension due to high US tariffs on Indian goods imposed in 2025. Under this understanding, the US agreed to lower tariffs on several Made-in-India products, while India agreed to continue and strengthen trade cooperation with the US. The deal aims to reduce trade disputes, support Indian exporters, and deepen economic relations between the world’s two largest democracies.

How It Started?

- In 2025, the US and India began facing trade tensions because of disagreements over tariffs (tax rate on imports).

- The US felt India’s trade barriers were high and that India was importing cheap Russian oil, which the US opposed.

- In response, the US began raising tariffs on Indian goods:

a) 31 July 2025 - US announced 25% import tariff as a “reciprocal tariff” on multiple Indian export items, effective August 7, 2025

b) 6 August 2025 - Additional tariff of 25% was announced by US on Indian exports as a penalty for buying Russian oil, which made total tariff raised to 50%, effective from 27 August 2025)

- These high tariffs made Indian products very expensive in the US and hurt Indian exporters.

What happened in Deal now?

- After months of talks and diplomatic efforts, US President Donald Trump and Indian Prime Minister Narendra Modi agreed on a trade deal on 2 February 2026.

- Key points of the agreement:

a) The US reduced its tariffs on Indian goods to 18% (from the previous high level of 50%).

b) Trump claimed that India had agreed to stop buying Russian oil and would now buy oil from the US and Venezuela.

c) Both sides talked about boosting trade, with India potentially buying up to $500 billion worth of American goods over several years.

d) India will allow US agriculture and dairy products but will keep Indian farmers and dairy products producers' interest intact.

e) India will allow more US products but will have a check to protect the interest of our Indian manufacturers.

After the Deal effect

- Prime Minister Narendra Modi welcomed the tariff reduction, saying he was happy that ‘Made in India’ products will now face a lower tariff of 18% in the US.

- The stock markets reacted positively, with Indian shares and the rupee strengthening after the deal was announced.

- Key Indian export sectors like textiles, gems & jewellery, chemicals, and other product manufacturers are expected to benefit from the lower tariffs.

This is a historic trade agreement with the US, both sides will be benefitted by this pact. India, EU also announced FTA (Free Trade Agreement) recently. These agreements will benefit Indian manufacturers and may give a boost to our endeavour to make India a world’s third-largest economy in terms of GDP by 2028 and a developed country by 2047.

The opposition leaders are against this US deal. They say it could harm Indian farmers, dairy product producers, fishermen and Indian manufacturers. According to them, the deal may also lead to stronger competition for Indian products, which could make it difficult for small farmers and local producers to compete and earn a stable income.

The stand of our government is that we will protect the interests of our farmers,dairy product producers. Fishermen,Indian manufacturers etc at all costs. Our government is committed for welfare of all sections of society.