The proposed agreement aims to reduce tariffs to 15–16%, curb India’s Russian oil dependency, and expand US agricultural access.
A Major Breakthrough at the ASEAN Summit?
India and the United States are reportedly on the brink of finalizing a strategic trade deal, potentially set to be unveiled during the ASEAN Summit at a high-profile meeting between Prime Minister Narendra Modi and US President Donald Trump.
- The deal proposes a sharp reduction in import tariffs—from nearly 50% down to 15–16% on select products.
- It also outlines expanded access for US agricultural goods, including non-GMO corn and soymeal.
- A key part of the deal involves India scaling down crude oil imports from Russia in favor of US energy supplies.
This comes as both countries seek to strengthen trade relations amid rising global tensions and economic realignments.
Energy at the Core of the Deal
Energy cooperation is central to the agreement, with India signaling a gradual reduction in Russian crude purchases, which currently make up 34% of its oil imports.
- The US is reportedly offering energy trade concessions in exchange.
- Indian state-run oil firms may be informally encouraged to source more crude from the US.
- Washington wants to curb Russian oil trade, viewing it as a financial pipeline for the Russia-Ukraine conflict.
President Trump claimed that Modi assured him India would “not buy much oil from Russia”—a key precondition for the deal.
“He wants to see the war end… They’re not going to be buying too much oil,” Trump said during a Diwali event at the White House.
However, India’s external affairs ministry said it had no record of such a commitment, and officials have indicated that economic viability remains India’s guiding principle in energy sourcing.
Tariff Reductions Could Transform Bilateral Trade
Currently, Indian imports from the US face steep tariffs, especially in sensitive sectors. Under the proposed deal:
- Import duties on specific US goods could be slashed to 15–16%, down from as high as 50%.
- India is pushing for a periodic review mechanism to ensure the flexibility of tariff adjustments.
- In return, the US may reduce or eliminate punitive levies on Indian exports, including those imposed earlier this year in retaliation for India’s Russian oil imports.
US Gains in Agriculture: Corn, Soymeal, and More
India may raise the import quota for non-GM maize from the current 0.5 million tonnes annually, while retaining a 15% import duty.
- This will help meet rising demand from India’s poultry feed, dairy, and ethanol industries.
- The deal may also open doors to non-GM soymeal imports for both human and livestock use.
However, there’s no final decision on dairy product tariffs, especially high-end cheese, which remains a key US demand.
Strategic Timing and Geopolitical Implications
The timing of the deal is significant:
- India is balancing ties with both Russia and the US amid the ongoing war in Ukraine.
- The US, in turn, is seeking stronger alliances in Asia to counter China’s economic influence.
For Trump, sealing the trade pact could mark a major diplomatic win ahead of the 2026 election cycle. For Modi, it signals a deeper global economic integration—without compromising India’s energy security or domestic interests.
