US-India trade deal: How revised tariff will boost exports while shielding farms

India and the US reached a trade deal on Monday after months of tough negotiations. The diplomatic breakthrough led US President Donald Trump to slash tariffs on India to 18% from 25% following his phone call with Prime Minister Narendra Modi.

ET explains the deal and what is likely to happen next.

What has been agreed between India and the US?


India and the US have agreed to a trade deal wherein Washington has reduced its reciprocal tariffs to 18% from 25%, and done away with the 25% penal duty for buying Russian oil.

What is the impact on India?

This significant tariff reduction by the US will make Indian exports competitive. Labour intensive and export sectors such as textiles, apparel, leather, footwear, gems & jewellery, plastics, machinery, aircraft components and marine products will gain strongly, creating large employment opportunities. Fishermen and seafood exporters along coastal regions will also benefit from improved tariff access. MSMEs, engineering goods, auto components and small manufacturers will receive expanded US market access.

Has India protected its dairy and agriculture?

Sensitive sectors like agriculture and dairy are safeguarded. There is no compromise on farmers' interests.

What are the other benefits for India?

India is expected to attract advanced technologies, data centres, global capability centres, supply-chain integration and semiconductor and AI sector collaboration. The aim is to integrate India deeper into global value chains and boost manufacturing competitiveness.

How much American products will India buy?

India is expected to buy $500 billion of US energy, technology, coal and many other products over a period of five years.

What follows the announcement by the two leaders?

A joint statement is expected to come soon and full technical details will be released through a formal India-US joint statement once the final processes are completed.