New Delhi: India and the United States are reportedly on the verge of finalising a landmark trade deal that could slash US tariffs on Indian exports. At present, the United States imposes around 50% tariffs on several Indian products. If the agreement comes through, that rate may drop to 15-16%, offering a major boost to exporters and the economy.. Long delayed, the pact is now gaining traction as discussions around energy cooperation and agricultural access advance rapidly.
Will White House punitive tariffs vanish? Speaking at a Kolkata event hosted by the India Chamber of Commerce, Chief Economic Advisor V. Anantha Nageswaran expressed confidence in the outcome. “While I don’t have a magic wand or inside access, I personally believe that in the next few months, or perhaps sooner, we will see resolution of the additional 25% punitive tariffs,” he said.
These duties have caused challenges for Indian exporters.
Nageswaran added that negotiations on reciprocal tariffs are ongoing. “It is possible that these 25% reciprocal tariffs may also reduce to the anticipated 15–16% level,” he said. If that happens, it will be a moment of significant celebration for India’s trade sector.
In financial year 2024-25, India exported $86.51 billion to the United States – its largest market. Nageswaran said that tariffs had limited impact this year since India had already captured half the volume.
However, maintaining the 50% rate could have slashed exports by 30% next year, a severe blow for an economy where exports contribute roughly a quarter of GDP. The trade deal could prevent this setback.
Energy Ties Underpin the Deal
Energy strategy is a central pillar of the proposed agreement. Reports suggest that India may gradually cut crude imports from Russia as part of broader economic cooperation with Washington. Russian oil purchases had triggered the earlier 25% punitive tariff. Currently, India imports about 34% of its crude oil from Russia, while approximately 10% comes from the United States.
India could allow ethanol imports and reduce Russian crude purchases. In return, energy trade concessions from the United States are likely. Government oil companies may diversify sourcing with US crude. Recent reports show the price gap between discounted Russian crude and benchmark oil has narrowed from $23 per barrel in 2023 to just $2–2.50, making Middle Eastern and US crude more competitive.
The trade pact also touches on agriculture. India may increase access for US non-GMO corn and soymeal. US exporters face shrinking markets, especially after China reduced its corn imports drastically (from $5.2 billion in 2022 to $331 million in 2024). India could become a major buyer for American agricultural products.
During a recent phone conversation between US President Donald Trump and Prime Minister Narendra Modi, energy dominated the agenda. The US president later claimed that PM Modi had assured him that India would limit its oil purchases from Russia.
PM Modi acknowledged the call, highlighting the “constructive engagement” but did not provide additional details. He took to X (formerly Twitter) to express appreciation for the outreach from Washington.
“Thank you, President Trump, for your phone call and warm Diwali greetings. On this festival of lights, may our two great democracies continue to illuminate the world with hope and stand united against terrorism in all its forms,” the prime minister posted.
Thank you, President Trump, for your phone call and warm Diwali greetings. On this festival of lights, may our two great democracies continue to illuminate the world with hope and stand united against terrorism in all its forms.@realDonaldTrump @POTUS
— Narendra Modi (@narendramodi) October 22, 2025
Possible Announcement At ASEAN Summit
The trade deal may include mechanisms for periodic review of tariffs and market access, allowing India and the United States to adjust terms over time.
Officials from the Ministry of Commerce and the White House have not formally commented, but reports indicate a formal announcement could coincide with the ASEAN Summit later this month.
However, Prime Minister Narendra Modi is unlikely to travel to Malaysia to participate in the meetings related to the ASEAN summit beginning Sunday due to scheduling issues, people familiar with the matter told PTI on Wednesday.
If finalised, this agreement could mark one of the most significant shifts in India-US trade relations in years, reshaping tariffs, boosting agricultural exchanges and signalling a new phase in strategic energy alignment.