On February 2, 2026, U.S. President Donald Trump and Indian Prime Minister Narendra Modi announced a landmark U.S.–India trade agreement, marking a major easing of trade tensions between the two countries.
Key Highlights
- The United States has reduced reciprocal tariffs on Indian products to 18%, down from much higher effective rates earlier.
- An additional 25% punitive duty linked to India’s purchase of Russian oil has been withdrawn, sharply lowering the overall tariff burden on Indian exports.
- The U.S. President stated that India has agreed to stop buying Russian crude oil and shift energy imports towards the U.S. and other sources.
- The U.S. administration also claimed that India will purchase over $500 billion worth of American energy, technology, and agricultural products, while moving towards reducing tariff and non-tariff barriers on U.S. goods.
Economic Impact
The announcement boosted market sentiment, as the U.S. is India’s largest trading partner. The lower tariff rate makes Indian exports more competitive compared to other Asian exporters.
Sectors expected to benefit include:
- Textiles and Apparel, which were among the worst affected by earlier high duties
- Gems and Jewellery, due to reduced export costs
- IT Services, with major Indian tech companies witnessing positive market reactions
- Energy and Technology, driven by increased imports from the U.S.
