India-US Trade Deal Set to Cut Tariffs, Lower Costs Across Sectors

Feb 2026 : India’s new trade agreement with the United States, announced after a phone call between Prime Minister Narendra Modi and US President Donald Trump, is poised to slash reciprocal tariffs and make a wide range of products cheaper for Indian consumers and businesses. Under the deal, the United States has agreed to cut tariffs on Indian goods from higher punitive levels to 18 per cent, a move seen as a thaw in recent trade tensions and a boost for exporters and importers alike.

The tariff reduction is expected to benefit technology hardware and components, including laptops, consumer electronics and other gadgets, making them more competitively priced in the Indian market. Processed foods, packaged goods and household appliances imported from the US are also anticipated to see lower costs, as import levies are eased under the agreement. While detailed official notifications from the Indian government are still awaited, business analysts believe the move will help moderate inflationary pressures on consumer products.

Agricultural products such as pulses, dairy goods and other processed food imports could also enjoy reduced duties, potentially relieving some strain from rising food prices seen across the country. Sectors with strong export linkages to the US, including textiles and apparel, could gain new momentum, while gems and jewellery—one of India’s most significant export categories—stands to benefit from improved tariff conditions.

Industrial and engineering segments, such as steel, chemicals and related goods, may experience smoother access to the American market. However, analysts caution that despite the tariff cut, some goods including steel, aluminium and copper may still attract significant duties, and certain automotive components could continue to face high tariffs even after the new deal takes effect.

The agreement has broader geopolitical implications as well. According to statements linked to the deal, India has agreed to reduce its purchases of Russian oil and increase imports from the United States and potentially from Venezuela, a condition that was highlighted by President Trump as part of the negotiations. While India has acknowledged the announcement, formal confirmation on oil sourcing commitments from New Delhi is expected in forthcoming government briefings.

Prime Minister Modi welcomed the announcement, posting on social media that he was “delighted that Made in India products will now have a reduced tariff of 18 per cent,” and extended his thanks to President Trump “on behalf of the 1.4 billion people of India.” The tariff cut and trade deal, observers say, not only reset commercial ties between the two world’s largest democracies but also sets the stage for deeper economic cooperation in the years ahead.