India and the US have reached a long-awaited trade breakthrough, with President Donald Trump announcing a sharp reduction in tariffs on Indian goods, easing months of trade tension between the two countries. Under the announcement, US duties on Indian imports will fall from 50 percent to 18 percent, bringing India broadly in line with other Asian manufacturing hubs.
The move was welcomed in New Delhi after a prolonged period of uncertainty that had weighed on exports, investment flows and financial markets. India had been subject to the highest US tariffs globally since August last year, when duties were raised in response to the country's continued purchases of discounted Russian oil.
Following a call between Trump and Prime Minister Narendra Modi, the US president said India had agreed to reduce purchases of Russian oil and increase imports from the US. Indian officials have not confirmed those claims, though Mr Modi described the announcement as a positive step and said he hoped to take bilateral relations to "unprecedented heights".
The tariff rollback follows a period in which US-India relations had deteriorated sharply, with Indian exports to the US falling across key sectors including textiles, seafood and jewellery. The pressure also accelerated India's efforts to diversify trade ties, culminating last week in a major agreement with the EU that will eliminate tariffs on most goods.
"This greatly boosts India's appeal as an alternative to China for the reconfiguration of supply chains," said Shilan Shah of Capital Economics. "India still offers many other advantages that other manufacturing hubs can't, including low labor costs, political stability and a large domestic market for multinational corporations to sell to as a hedge against future tariffs."
However, no joint statement or detailed agreement has yet been released, leaving open questions over product coverage, timelines and commitments in sensitive areas such as agriculture.
Despite the lack of detail, both sides have indicated that further phases of talks are expected, suggesting the deal marks the beginning of a broader reset rather than a final settlement.