India-U.S. deal raises hopes for a reset — but the fine print remains unclear
Indian Prime Minister Narendra Modi and U.S. President Donald Trump hold hands onstage at NRG Stadium during a rally in Houston, Texas, on September 22, 2019.
Sergio Flores | Getty Images News | Getty Images
The United States and India announced a trade deal on Monday after months of negotiations, raising hopes for a strategic reset after relations sank to their lowest point in decades.
But the lack of detail and a clear timeline has raised doubts about how quickly the framework can be turned into a binding agreement and whether the two countries can move beyond last year’s tensions.
President Donald Trump said the US would reduce reciprocal tariffs on India from 25% to 18% after Prime Minister Narendra Modi agreed to halt purchases of Russian oil. in Washington reportedly waived An additional 25% customs duty was imposed on oil purchases in New Delhi.
India will also reduce tariffs and non-tariff barriers on US goods to zero and pledge to buy $500 billion of US products, Trump said, without giving further details on the timeline or industry commitments.
Modi confirms new 18% tariff rate at a meeting Publish on XHe described the agreement as a step towards restoring stability and momentum in bilateral relations.
“I look forward to working closely.” [President Trump] to take our partnership to unprecedented heights,” Modi said. But the Indian leader did not mention Russian oil or Trump’s claim that India would lift tariffs on American goods.
Relations between the long-time partners soured rapidly during Trump’s second term after he claimed to have brokered an end to the conflict between India and Pakistan in May; New Delhi rejected this characterization. While Washington protected China, Russia’s largest energy importer, tensions deepened further when India imposed additional customs duties on Russian oil purchases.
“[The] The devil is in the details. “I have a hard time believing that the Indian government would make clear any Russian commitment to oil,” said Evan Feigenbaum, vice president for research at the Carnegie Endowment for International Peace.
Feigenbaum was also skeptical of India’s effort to reach the $500 billion target, calling it “a bit far-fetched.” But Feigenbaum said U.S.-India trade “is infinitely below its potential, so ambition is good.”
The United States remained India’s largest trading partner and an important partner in defense, technology and advanced manufacturing.
Total trade in goods and services between the two countries increased by over 8% to $212.3 billion in 2024. US official data showed. While US goods exports to India increased by 3% to $41.5 billion in 2024, service exports increased by 16% compared to the previous year, reaching $41.8 billion.
strategic reset
The trade deal provides major relief to India, which faces some of the highest US tariff rates among major economies.
The new 18% rate would be slightly more favorable than the rates applied to Pakistan, which faces a 19% tariff, and the 20% tariffs imposed on Vietnam and Bangladesh, the main regional rivals in production.
“This trade deal is just what the doctor ordered: a confidence-building measure that could help the two sides work through their various issues — including trust that the Trump administration has squandered in New Delhi in recent months,” said Mark Linscott, a senior fellow on India at the Atlantic Council and former U.S. trade official.
Most of Trump’s deals with trade partners remain frameworks, with few details and unclear implementation timelines. Legal questions also remain about whether the president has the authority to conclude binding trade agreements without congressional approval.
“I expect to see the implementation of this agreement. But beyond that, the two sides need to enter the next phase of negotiations and address a broader set of issues,” Linscott said, particularly in areas such as economic security, technical barriers to trade, digital trade and intellectual property rights. he said.
Analysts say the timing of the US-India deal comes a week after New Delhi finalized a comprehensive free trade agreement with the European Union. It increased the urgency of talks with Washington.
Arpit Chaturvedi, Teneo’s South Asia consultant, said the EU deal took some pressure off New Delhi by providing an alternative Western economic anchor amid global tariff fluctuations, but the US deal “carries greater strategic weight”.
Describing the agreement as a reset in India-US strategic relations, Chaturvedi said, “Therefore, stabilizing trade ties with Washington goes beyond tariff arithmetic and strengthens India’s place in the Western supply chain and strategic calculations.” he said.
increasing distrust
While both countries hailed the trade deal as a milestone, analysts said it was unlikely to completely eliminate the strategic mistrust that developed last year.
“Let’s not talk as if the last six months never happened or as if they somehow went ‘poof’ in a magical puff of fairy dust and smoke,” Feigenbaum said.
Repairing the US-India relationship may require more effort than unraveling it. Modi as relations worsen with Trump administration At the summit held in Beijing last year, he tried to deepen relations with China and Russia.
India’s ties with Russia are likely to remain a thorny issue for Trump as New Delhi attempts a diplomatic balancing act to maintain stable relations with Moscow without angering Trump.
“Although India has and will change its oil import structure away from Russia, it will still want to keep its relations stable,” said Farwa Aamer, director of South Asia Initiatives at the Asia Society.
Late last year, India’s state-run refiners signed their first long-term deal with the United States to import 2.2 million tonnes of liquefied petroleum gas in 2026, as part of New Delhi’s efforts to seal a trade deal with Washington. Private refineries in India reportedly In January, Russia reduced its oil purchases.
Without mentioning Russia, Modi said: Publish on X “President Trump’s leadership is vital to global peace, stability and prosperity. India fully supports his peace efforts.”
“More needs to be done to insulate the relationship and ensure adequate resilience to withstand future challenges,” said Basant Sanghera, managing director of The Asia Group. Stating that tariff reductions represent only the first phase of a bilateral agreement, he said both parties must finalize a legally binding text.
