A significant India-US trade agreement has been finalized, featuring substantial tariff reductions, agricultural product coverage, and strategic energy policy changes that could reshape bilateral economic relations and reduce external uncertainties for Indian businesses.

Major Tariff Reductions and Agricultural Coverage

The trade deal includes dramatic tariff cuts that will benefit Indian exporters significantly, with recent confirmation from Indian officials that the agreement covers certain agricultural products. The agreement details show substantial improvements in trade terms:

This substantial tariff reduction from 50% to 18% represents one of the most significant improvements in India-US trade relations. The inclusion of agricultural products in the deal framework provides additional opportunities for India's farming sector to access US markets more competitively.

Strategic Energy Policy Shift

As part of the comprehensive agreement, India has committed to discontinuing its purchases of Russian crude oil. This strategic decision aligns India's energy policy with US geopolitical objectives and marks a significant shift in India's energy sourcing strategy.

Impact on External Uncertainty

The formalized trade agreement addresses the external uncertainties that have been affecting India's economic environment. With concrete tariff reductions, agricultural product coverage, and clear trade terms, businesses now have greater predictability in US-India trade relations, creating a more stable framework for long-term planning and investment decisions.

Economic Growth Implications

The combination of reduced trade barriers, agricultural sector inclusion, and strategic policy alignment creates favorable conditions for economic expansion. Lower tariffs will make Indian goods more competitive in US markets, while the agricultural product coverage opens new export opportunities for India's farming sector.

This landmark trade deal represents a significant milestone in India-US economic cooperation, potentially strengthening India's position in global markets while supporting domestic economic growth through improved export opportunities across multiple sectors including agriculture.

The United States has signalled potential flexibility regarding the 25% tariff imposed on India over Russian oil purchases, with Treasury Secretary Scott Bessent indicating there could be a pathway to removing the levy.

Policy Success Cited as Basis for Potential Relief

Speaking to Politico on the sidelines of the World Economic Forum in Davos, Bessent expressed optimism about the tariff's removal, stating "I would imagine there is a path to take them off." The Treasury Secretary emphasized that the tariff had achieved its intended purpose.

Tariff Effectiveness Demonstrated

Bessent argued that the tariff had worked as intended, pointing to a significant reduction in Russian oil purchases by Indian refineries. "The purchases of Russian oil by their refineries has collapsed, so that is a success," he stated, while confirming that "the 25% Russian oil tariffs are still on."

The Treasury Secretary's comments suggest that the policy's effectiveness in reducing Indian purchases of Russian oil could serve as justification for its eventual removal, though no specific timeline or conditions were outlined.

Current Trade Policy Status

While Bessent's remarks indicate potential diplomatic flexibility, he made clear that the tariff remains active. The 25% levy was originally imposed as part of broader efforts to limit Russian oil revenues, with India being targeted due to its continued energy purchases from Russia.

The Treasury Secretary's statements at Davos represent the first official indication from the current administration regarding potential modifications to the India-specific tariff policy.