The United States (US) and India have reached a new trade agreement that sharply reduces US tariffs on Indian goods in exchange for India halting purchases of Russian oil and lowering trade barriers, US President Donald Trump announced on Monday.
Read More: Trump announces ‘trade deal’ with India after Modi call
Trump said US tariffs on Indian imports would fall to 18 per cent from 50 per cent following a call with Indian Prime Minister Narendra Modi. A White House official told Reuters that Washington would rescind an additional punitive 25 per cent duty imposed over India’s continued purchases of Russian oil, which had been layered on top of a 25 per cent “reciprocal” tariff.
Trade Deal announced Tariffs reduced to 18%, Trump says Modi agreed to stop buying Russian Oil (Diversification implied). India to buy energy, Technology, Agriculture, Coal and many other products of 500 billion $.
(Agriculture likely for Industrial Uses, Walnuts, Cranberries,… pic.twitter.com/WdRKJgfFVo
— Navroop Singh (@TheNavroopSingh) February 2, 2026
Trump said India had agreed to stop buying Russian oil and would instead purchase energy from the United States and potentially Venezuela. He also said New Delhi committed to buying more than $500 billion worth of US energy, technology, agricultural and other products, and to reducing tariff and non-tariff barriers against the United States.
Markets reacted positively to the announcement, with US-listed shares of major Indian companies rising sharply. Infosys, Wipro and HDFC Bank all posted strong gains, while an India-focused exchange-traded fund rose about three per cent.
Despite the announcement, key details of the deal remain unclear. The White House has yet to issue the legal notices required to make the tariff changes official, and neither the US nor Indian governments have provided timelines or specifics on trade barrier reductions or oil purchase commitments.
Indian Prime Minister Modi welcomed the agreement, calling it a major boost for Indian exports. India’s trade minister said the deal would bring the two economies closer and help India access US technology.
Read More: US eyes lifting 25% India tariffs
US business groups responded cautiously, with some praising progress toward a broader trade pact, while others warned that tariffs remain far higher than before Trump returned to office.
The deal comes as Washington races to finalise trade agreements with major partners amid ongoing legal challenges to Trump’s tariff authority.