India To Cut Auto Tariffs; Buy Oil, Defence, Pharma, Electronics From US Under New Trade Deal

Last Updated:February 03, 2026, 11:39 IST

India has not clarified its position on buying Russian oil or purchasing $500 billion worth of US goods.

Agriculture, Auto Among Key Areas In India–US Trade Deal.(File Photo: Reuters)

President Donald Trump said on Monday that the United States and India have reached a trade deal that will reduce tariffs on Indian goods. Under the agreement, Washington will lower its reciprocal tariff on Indian goods to 18 per cent and remove the additional 25 per cent penalty imposed over India’s purchase of Russian oil. In return Trump has said India will reduce its tariffs on US products to 0 per cent.

India-US trade details 

Although, no official document has been released outlining the terms of the deal. A Reuters report said the agreement includes some agriculture products. Agriculture had earlier been a major point of disagreement, with Prime Minister Narendra Modi refusing to open the Indian market to US farm products.

The report also said Washington asked India to cut high tariffs in sectors such as automobiles. It added that India has agreed to buy US goods including petroleum, defence equipment, electronics, pharma products, telecom products and aircraft.

Trump, who called Modi “one of my greatest friends," said India agreed to cut its tariffs on US goods to zero and remove non-tariff barriers. He also said India has committed to stop buying oil from Russia and reduce tariffs to zero as part of the understanding.

However, India has not officially confirmed these details. The exact terms remain unclear as information is currently coming from statements made by US officials.

Talks for a broader deal to continue

An Indian official quoted by Reuters said talks will continue for a more comprehensive agreement covering additional sectors. The report repeated that the deal includes some agriculture products and addresses US demands for tariff cuts in sectors such as automobiles.

India’s reported commitment to buy US goods includes petroleum, defence, electronics, pharma, telecom products and aircraft.

Ambiguity over scope of deal

In the absence of a formal joint statement, there is uncertainty over what both sides have agreed to. India has not clarified its position on buying Russian oil or purchasing $500 billion worth of US goods.

Still, the reduction of a 50 per cent US tariff on India to 18 per cent is seen as significant. Trump said India has committed to buy $500 billion worth of US energy, technology, agriculture and coal.

Boost to Indian exporters

Lower US tariffs could help Indian exporters by reducing cost barriers in the American market. Sectors such as textiles, apparel, seafood, chemicals and auto components may benefit. With tariffs lowered to 18 per cent, India could be better placed than countries like Vietnam, Thailand and Indonesia in some US markets.

Despite Trump’s announcement, Global Trade Research Initiative (GTRI) has urged caution. Its founder Ajay Srivastava said, “Caution, not celebration, is warranted."

He noted that Trump’s remarks did not clearly specify which goods would see tariff and non-tariff barrier removal. GTRI pointed out that India has traditionally resisted opening sensitive sectors such as food grains and genetically modified products.

Meanwhile, after Trump said India would buy more than $500 billion worth of US goods, GTRI observed that India’s current annual imports from the US are below $50 billion, suggesting that reaching $500 billion would take more than 20 years and may be a long-term target rather than a firm commitment.

Srivastava said the lack of clear details makes it difficult to treat the announcement as a concluded trade deal. “Trade deals are serious business. Until there is a joint statement, negotiated text, and clarity on enforceability, this should be treated as a political signal, not a concluded trade deal. Caution, not celebration, is warranted," he said.

News india India To Cut Auto Tariffs; Buy Oil, Defence, Pharma, Electronics From US Under New Trade Deal

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