India's zero-tariff pledge in US trade deal: What it means
If carried out, the move would mark a significant shift in India's long-standing trade approach, which has traditionally depended on protective measures to support domestic industries. It could open the door wider to US agricultural goods, energy supplies and manufactured products.
US President Donald Trump announced that he has agreed to a trade deal with India that cuts US reciprocal tariffs on Indian goods from 25 per cent to 18 per cent, while New Delhi is set to reduce its tariffs and non-tariff barriers on American products, potentially to zero.
In a post on Truth Social, Trump said he spoke with Prime Minister Narendra Modi and described him as a great friend and a powerful and respected leader. He said the two leaders discussed trade and efforts to end the Russia–Ukraine war.
The US has also dropped the additional 25 per cent tariffs imposed on Indian imports over New Delhi’s purchase of Russian oil. Trump said PM Modi agreed to stop buying Russian oil and to buy more oil from the United States and potentially Venezuela, a move he said would help bring an end to the war in Ukraine.
However, in trade terms, this language typically signifies an in-principle commitment to lower or phase out duties on selected US products rather than an immediate elimination of all import duties. Non-tariff barriers encompass various restrictions such as licencing rules, quotas, certification requirements, local sourcing norms, and regulatory approvals that can limit market access.
SHIFT IN INDIA TRADE POLICY?
If carried out, the move would mark a significant shift in India’s long-standing trade approach, which has traditionally depended on protective measures to support domestic industries. It could open the door wider to US agricultural goods, energy supplies and manufactured products.
However, India has not publicly confirmed any plan to remove such barriers, raising questions about how far New Delhi is prepared to liberalise its trade policy.
Prime Minister Narendra Modi welcomed the development, calling it a boost for "Made in India" products. He did not comment on other elements outlined by Trump.
FEW DETAILS ON IMPLEMENTATION
Despite the high-profile announcements, several aspects of the agreement remain unclear.
Trump’s post did not specify how trade barriers would be reduced, or which US products India had committed to buying. Officials on both sides are yet to release a detailed framework of the deal.
The agreement comes days after India signed a major trade deal with the European Union, which is expected to cut or eliminate tariffs on over 96 per cent of traded goods, though key farm products were excluded.
Trade experts say the commitment could mirror India’s approach in its recent agreement with the European Union. If a deal has indeed been finalised, India may have offered to reduce tariffs to zero on a vast majority of product categories, following the principle that concessions extended to the EU would need to be matched by the US as well.
The agreement comes days after India signed a major trade deal with the European Union, which is expected to cut or eliminate tariffs on over 96 per cent of traded goods, though key farm products were excluded.
Trump also said the PM was committed to buying American products at a higher level, including purchases worth more than $500 billion of US energy, technology, agricultural, coal and other products.