India-US Trade Deal: Tariffs on Indian Exports Cut to 18 Percent

The United States has announced a new trade arrangement under which tariffs on Indian exports to the US will be reduced, following a phone conversation between Prime Minister Narendra Modi and US President Donald Trump.

Modi confirmed that Indian goods would now face an 18 percent tariff, down from the earlier reciprocal rate of 25 percent. He welcomed the move as a boost for Indian exporters and described it as a positive step for cooperation between the world’s two largest democracies. Union Minister Ashwini Vaishnaw said that the two countries had reached a “win-win” trade deal that would benefit industries and consumers on both sides.

In his social media post, Trump said that the United States would lower its reciprocal tariff on Indian goods from 25 percent to 18 percent with immediate effect. As per reports, an additional 25 percent punitive tariff imposed earlier over India’s Russian oil imports would be withdrawn as part of the arrangement, resulting in a final tariff rate of 18 per cent.

Further, Trump said that the agreement went beyond tariff relief. In his social media post, he claimed that India had agreed to cut tariffs and non-tariff barriers on US goods to zero and commit to purchasing more than 500 billion dollars’ worth of American energy, technology, agricultural products, and coal. He also stated that India would halt purchases of Russian oil and instead source energy from the United States and potentially Venezuela, linking the move to efforts to end the Russia–Ukraine war.

Indian statements, however, confirmed only the reduction in tariffs on exports to the United States. There has been no official confirmation from the Indian government on claims related to halting Russian oil purchases or large-scale commitments to buy US goods and energy.

The new tariff rate for Indian exports would be lower than the 19 percent duty applied to Pakistani goods. In a social media post, Modi said that he was pleased that “Made in India” products would benefit from the reduced tariff.

Reports indicate that External Affairs Minister S. Jaishankar is expected to participate in a critical minerals ministerial dialogue in Washington, DC, in the coming days. It may be noted that a US trade delegation visited India in December 2025.

It may also be recalled that trade ties had worsened after Washington imposed tariffs of up to 50 percent on Indian goods, including a 25 per cent punitive levy linked to Russian oil imports.

Commenting on this development, Vivek Gupta, Managing Director of Oswal Pumps, said, “The tariff reduction from 25 percent to 18 percent improves export competitiveness for Indian energy-efficient pump manufacturers in global markets. The Indian pump industry, particularly manufacturers focused on solar-powered and energy-efficient solutions, benefits from better pricing when competing internationally.”

He further noted, “The USD 500 billion commitment for US energy and technology creates major opportunities for India’s renewable transition. If it includes solar components, energy storage, and clean energy tech entering India at reduced tariffs, adoption of solar-powered water solutions will accelerate. Solar pump use in agriculture and industry depends on affordable panels, charge controllers, and energy management systems. Lower costs for US technology make solar pumping systems more viable. Eliminating tariffs on US imports gives access to advanced inverters, battery storage, energy-efficient motors, and smart controllers. Indian manufacturers benefit from both improved export competitiveness and stronger domestic demand driven by affordable clean energy solutions.”

Gyanesh Chaudhary, CMD, Vikram Solar, pointed out, “The USD 500 billion India–US trade deal, with reciprocal tariffs rationalised to 18 percent, represents a structural inflection point for India’s energy industry, particularly on the export front. Indian energy and clean-tech exports to the US have played an instrumental role in the industry, and this agreement enhances global competitiveness by improving price efficiency, certainty of access, and long-term demand visibility. For Indian manufacturers across solar, energy equipment, advanced materials, and power infrastructure, this creates a runway to scale exports, deepen value addition, and integrate into global supply chains. It strengthens India’s position as a reliable energy exporter and technology partner to the world’s largest economy.”

While, Vinay Thadani, Director and CEO - GREW Solar, Said, “ The recent U.S. tariff framework brings greater clarity to global solar trade dynamics and allows manufacturers to plan export strategies with more certainty. For the industry, this reinforces the need to strengthen cost competitiveness, supply chain resilience, and geographic diversification to sustain export momentum. The strong global demand for reliable solar manufacturing continues to present long-term opportunities for Indian players.”