India and the United States have agreed to reduce US tariffs on Indian exports from 50% to 18% under a bilateral trade deal, boosting India's competitiveness. Commerce Minister Piyush Goyal assured Parliament that agriculture and dairy sectors are fully protected. The agreement removes punitive tariffs linked to India's Russian oil purchases.
The recent India-US trade deal provides significant relief to Indian exporters. Following a phone conversation between Prime Minister Narendra Modi and President Donald Trump, the United States announced a reduced 18% tariff on Indian goods. This rate is lower than those imposed on several competing countries, enhancing India's position in the US market.
Commerce Minister Piyush Goyal told Parliament on Wednesday, "India’s core sensitivities in food and agriculture have been fully safeguarded." He explained that the framework understanding resulted from intensive discussions over the past year, initiated after Modi's US visit in February 2025. Previously, a 50% tariff barrier—comprising a 25% punitive levy for Russian oil purchases and a 25% reciprocal tariff—had severely impacted labor-intensive sectors like textiles, leather goods, and marine products since August 2025.
The deal reinforces the US as India's largest export destination, accounting for nearly one-fifth of total exports. Sectors such as apparel, gems and jewellery, agricultural products, footwear, and leather stand to gain competitiveness. Goyal stated that it will unlock opportunities for MSMEs, entrepreneurs, and skilled workers, supporting the 'Make in India' vision and India's goal of a developed nation by 2047.
Detailed contours of the agreement will be announced soon after technical processes. On energy, Goyal clarified that securing supply for 1.4 billion Indians remains the top priority, with diversification ongoing. The pact deepens bilateral ties, including Quad cooperation.
