India and the United States are moving towards finalizing a long-awaited trade deal that could significantly reduce tariffs on goods exchanged between the two nations. According to reports, the new tariffs on Indian imports into the US could be lowered to a range of 15% to 16%, a substantial decrease from the current 50%.
This breakthrough agreement appears to be contingent on key sectors like energy and agriculture. A notable aspect of the potential deal is India’s consideration to gradually decrease its imports of crude oil from Russia. This development comes after discussions between US President Donald Trump and Indian Prime Minister Narendra Modi, where energy trade, including India’s oil purchases from Russia, was a central topic.
President Trump has reportedly linked the reduction of Russian oil imports by India to the finalization of the trade pact. India’s imports of Russian crude oil had previously led to a punitive 25% tariff on Indian exports, in addition to existing reciprocal tariffs.
Currently, Russia accounts for approximately 34% of India’s crude oil imports. Meanwhile, the US supplies about 10% of India’s total oil and gas needs by value.
Beyond energy, the trade deal may also involve India opening its markets to American agricultural products. This includes potentially increasing import quotas for non-genetically modified (non-GM) corn and allowing imports of non-GM soymeal for both human and livestock consumption. India is also reportedly seeking provisions for periodic reviews of tariffs and market access within the agreement.
The finalization of this bilateral trade agreement is anticipated to be announced during the ASEAN Summit, during a meeting between President Trump and Prime Minister Modi scheduled for later this month.
Discussions are also reportedly progressing on allowing more American corn imports, which would benefit India’s poultry feed, dairy, and ethanol sectors. However, clarity on tariff reductions for dairy products, including high-end cheese, remains a point of negotiation, as it is a key demand from the US delegation.
On the energy front, India’s gradual reduction of reliance on Russian oil, coupled with potential ethanol imports from the US, could lead to concessions from Washington. Indian state-run oil companies might receive informal guidance to diversify their crude oil sourcing towards the US.
President Trump has publicly stated that India’s prime minister assured him of limiting oil purchases from Russia, expressing hope that this would contribute to ending the conflict in Ukraine. While India’s Ministry of External Affairs has not confirmed this specific conversation, any move to scale back Russian energy imports is expected to be a phased process, especially given the economic viability that has made Russian crude attractive to India since the war in Ukraine began in 2022.