Significant progress is being made in trade negotiations between India and the United States, with a new report indicating that both nations are close to finalizing a long-awaited trade deal. This agreement could lead to a substantial reduction in tariffs on goods traded between the two countries, potentially bringing them down to the 15-16% range from the current high of 50% on some Indian imports.
The potential breakthrough hinges on crucial agreements in the energy and agriculture sectors. According to sources familiar with the matter, India may gradually decrease its reliance on Russian crude oil as part of the deal. This development comes as US President Donald Trump has indicated that Prime Minister Narendra Modi assured him of India’s commitment to limiting oil purchases from Russia during a recent phone conversation.
Previously, India’s significant oil imports from Russia had led to a 25% punitive tariff on Indian exports. Currently, Russia accounts for approximately 34% of India’s crude oil imports, while the United States supplies around 10% of India’s oil and gas needs by value.
In agricultural trade, India is considering opening its markets further to non-genetically modified (non-GM) American corn and soymeal. New Delhi is also reportedly pushing for a provision within the agreement that would allow for periodic reviews of tariffs and market access.
The finalization of this bilateral trade agreement is anticipated to be announced during the upcoming ASEAN Summit, potentially during a meeting between President Trump and Prime Minister Modi. India is reportedly looking into increasing its import quota for non-GM maize from the US, while maintaining the proposed 15% duty. The current annual quota for maize imports stands at 0.5 million tonnes, and New Delhi is considering allowing more American corn to meet the growing domestic demand from the poultry feed, dairy, and ethanol industries.
Discussions are also reportedly progressing on allowing imports of non-GM soymeal for both human and livestock consumption. However, clarity on tariff reductions for dairy products, including high-end cheese, remains a key demand from the US side.
On the energy front, India’s potential move to reduce Russian oil imports could be accompanied by allowing ethanol imports from the US. In return, Washington is expected to offer concessions in energy trade. Indian state-run oil companies might receive informal guidance to diversify their crude oil sourcing towards the US.
Reports suggest that President Trump has made the curbing of Russian oil imports a prerequisite for the trade pact. He has publicly stated that Prime Minister Modi assured him of India’s intention to reduce its oil purchases from Russia, linking it to a desire for peace in the Ukraine conflict.
While the Indian Ministry of External Affairs has stated they were unaware of specific conversations regarding this, any shift away from Russian energy would likely be a gradual process. India has been a significant importer of Russian crude since the conflict in Ukraine began in 2022, often purchasing at a discount.