India-US trade agreement: An explainer

US President Donald Trump has said that India and the US have agreed on a trade deal under which Washington will bring down reciprocal tariff on Indian goods to 18 per cent from the current 25 per cent The announcement is important as the US has imposed a steep 50 per cent tariffs on Indian goods entering American markets from August 27 2025Here is a list of key pointers to explain the announcementTariff definitionThese are customs or import duties which a country imposes on goods bought from other nations An importer has to pay this duty to the government Normally companies pass on these taxes to end users or consumersImport duty makes goods expensive in the importing country Besides a few other factors also play a role in this For example duty on Indias competitor nations such as Bangladesh 20 pc Vietnam 20 pc and Thailand 19 pc and quality and standards of itemsUSAS tariffs on IndiaIn August 2025 the US announced to impose a 25 per cent tariff plus another 25 per cent punitive duty for buying Russias crude oil and military equipment These duties are imposed over and above the existing tariffs that the Indian goods are facing in the USThe US has reduced the duty to 18 per cent Prime Minister Narendra Modi has said that he was delighted that made in India products will now have a reduced tariff of 18 per centWhy is US imposing tariffsThe US has alleged that it faces a significant trade deficit with India blaming New Delhi for imposing high tariffs on American goods which it says restricts US exports to the Indian marketTrumps announcementIt was an Honor to speak with Prime Minister Modi of IndiaWe spoke about many things including TradeHe agreed to stop buying Russian Oil and to buy much more from the United States and potentially VenezuelaThis will help END THE WAR in Ukraine which is taking place right now with thousands of people dying each and every week Out of friendship and respect for Prime Minister Modi and as per his request effective immediately we agreed to a Trade Deal between the United States and India whereby the United States will charge a reduced Reciprocal Tariff lowering it from 25 percent to 18 percentThey will likewise move forward to reduce their Tariffs and Non Tariff Barriers against the United States to ZERO The Prime Minister also committed to BUY AMERICAN at a much higher level in addition to over 500 BILLION DOLLARS of US Energy Technology Agricultural Coal and many other products Trump has said in a social media postDetails of the dealNo details are available so far An executive order from the US may provide clarity on the tariff issues the trade deal document is expected to outline the sectors covered under the agreement Both are awaitedGains for IndiaLabourintensive sectors such as garments leather and nonleather footwear gems and jewellery carpets and handicrafts may get a boost as high tariffs were hurting exports of these goods to the USBilateral tradeDuring 202125 the US was Indias largest trading partner in goods The US accounts for about 18 per cent of Indias total exports 622 per cent in imports and 1073 per cent in bilateral trade In 202425 the bilateral trade touched USD 186 billion USD 865 billion exports and USD 453 billion importsWith America India had a trade surplus the difference between imports and exports of USD 41 billion in 202425 It was USD 3532 billion in 202324 and USD 277 billion in 202223In services India exported an estimated USD 287 billion and imported USD 255 billion adding a USD 32 billion surplusAltogether India ran a total trade surplus of about USD 444 billion with the USMajor products traded between the twoIn 2024 Indias main exports to the US included drug formulations and biologicals USD 81 billion telecom instruments USD 65 billion precious and semiprecious stones USD 53 billion petroleum products USD 41 billion vehicle and auto components USD 28 billion gold and other precious metal jewellery USD 32 billion readymade garments of cotton including accessories USD 28 billion and products of iron and steel USD 27 billionImports included crude oil USD 45 billion petroleum products USD 36 billion coal coke USD 34 billion cut and polished diamonds USD 26 billion electric machinery USD 14 billion aircraft spacecraft and parts USD 13 billion and gold USD 13 billionServices tradeAs per estimates USAs services imports from India amounted to USD 406 billion in calendar year 2024 with computerinformation services imports at USD 167 billion and business managementconsulting at USD 75 billionHigh tariffs in USAs per reports the US imposes high duties on items like dairy products 188 per cent fruits and vegetables 132 per cent coffee tea cocoa and spices 53 per cent Cereals and food preparations 193 per cent Oilseeds fats and oils 164 per cent beverages and tobacco 150 per cent Minerals and metals 187 per cent and Chemicals 56 per centComments of experts on IndiaUS trade dealEPC Apparel Export Promotion Council Chairman A Sakthivel This development is expected to give a boost to apparel exports attract fresh investments across the value chain and reinforce Indias position as a reliable global sourcing hubFederation of Indian Export Organisations FIEO President SC Ralhan It is expected to lead to an immediate and substantial release of orders that were earlier put on hold particularly in labourintensive sectors such as apparel textiles leather and footwearThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever