India has gained a competitive edge in exports to the United States after Washington lowered tariffs on Indian goods to 18 per cent under a newly announced bilateral trade agreement.
Under the revised structure, Indian products now face lower duties than those from several countries in South and Southeast Asia. Exports from Indonesia attract a 19 per cent tariff, while Bangladesh and Vietnam face rates of 20 per cent each.
Compared to China, India enjoys significantly lower tariffs, with Beijing facing duties of 34 per cent. India also has a marginal advantage over Pakistan, where tariffs are set at 19 per cent.
The tariff reduction follows an announcement by US President Donald Trump, who said that the United States and India “have agreed to a trade deal,” cutting the reciprocal tariff from 25 per cent to 18 per cent “out of friendship and respect” for Prime Minister Narendra Modi. He said the agreement would take effect “immediately.”
In a post on Truth Social, Trump referred to his conversation with PM Modi and described him as “one of my greatest friends and, a Powerful and Respected Leader of his Country.” He said they discussed trade and the Russia-Ukraine war, and claimed that Modi had agreed to “stop buying Russian oil” and to increase purchases from the United States. Trump also said India would reduce tariffs and non-tariff barriers against American products.
“It was an Honor to speak with Prime Minister Modi, of India, this morning. He is one of my greatest friends and, a Powerful and Respected Leader of his Country… 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% to 18%… They will likewise move forward to reduce their Tariffs and Non Tariff Barriers against the United States, to ZERO,” Trump wrote.
Responding to the announcement, Prime Minister Narendra Modi said he was pleased with the development and thanked the US President. In a post on X, he said it was wonderful to speak with his “dear friend President Trump” and expressed happiness that “Made in India products will now have a reduced tariff of 18%.”
“Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18%. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement,” PM Modi wrote.
Meanwhile, a White House official told ANI that the US would also withdraw the additional 25 per cent tariff imposed on Indian imports over New Delhi’s purchase of Russian oil. The official said India would need to “cease, not just reduce, Russian oil purchases.”
When asked whether tariffs would be lifted in return for reducing Russian oil imports, the official said, “Yes, although the agreement is that India will cease, not just reduce, Russian oil purchases.”