FM Sitharaman Welcomes India-US Trade Deal, Says 18% Tariff Cut Is “Good News
NEW DELHI: Union Finance Minister Nirmala Sitharaman on Tuesday welcomed the recently announced trade agreement between India and the United States, describing the reduction in tariffs as “very good news” for Indian exporters.
Speaking to reporters, Sitharaman said the key highlight of the agreement is the cut in reciprocal tariffs, while adding that detailed terms and implementation mechanisms will be worked out and announced in due course.
“It’s very good news. It’s a reduction in tariff. But the details will have to be announced and worked out. At the moment, it is a reduction in the tariff,” she said.
She further noted that the tariff rate has come down to 18 per cent, calling it a positive development for Indian industry.
Trade Deal Announced After Modi–Trump Talks
Sitharaman’s remarks came a day after former US President Donald Trump announced that India and the US had finalised a trade deal following a telephonic conversation with Prime Minister Narendra Modi.
In a post on his social media platform, Trump said the agreement included a reduction in reciprocal tariffs on Indian goods from 25 per cent to 18 per cent. He also linked the deal to broader cooperation on energy, trade, and geopolitical issues.
Prime Minister Modi later confirmed the development, expressing satisfaction over the reduced tariffs for “Made in India” products and thanking the US leadership for the move.
He said stronger economic cooperation between the two democracies would benefit people on both sides and unlock new opportunities.
Key Details: Focus on Tariff Reduction
At present, the most concrete element of the agreement is the reduction in US tariffs on Indian exports.
According to Sitharaman, while the headline figure is encouraging, officials from both countries are still working on sector-wise concessions, timelines, and regulatory frameworks.
The agreement is expected to benefit export-oriented sectors such as textiles, engineering goods, gems and jewellery, leather products, and selected agricultural items.
Officials have also indicated that both sides will explore ways to reduce non-tariff barriers, which often affect trade through regulations and compliance requirements.
Broader Developments in Global Trade
The India-US deal comes just days after India and the European Union announced what both sides described as a major trade agreement.
While the European Union remains India’s largest trading partner as a bloc, the United States continues to be India’s single largest trading partner.
Together, these agreements reflect India’s efforts to expand its global trade network and secure better market access for domestic industries.
Energy and Strategic Dimension
During the same interaction, Trump also claimed that India would increase purchases of crude oil from the US and potentially Venezuela, as part of efforts to reduce dependence on Russian supplies.
He further suggested that Venezuelan oil could substitute Iranian crude, which India stopped importing in 2019 following US sanctions linked to Iran’s nuclear programme.
While Indian officials have not issued detailed statements on these energy-related aspects, analysts believe such discussions indicate the growing strategic dimension of India-US economic ties.
Impact Analysis: What It Means for India
Economists say the tariff cut to 18 per cent could improve the competitiveness of Indian goods in the US market and help boost export volumes.
Lower duties are expected to reduce costs for American importers of Indian products, making them more attractive compared to goods from other countries facing higher tariffs.
The deal may also encourage greater foreign investment in export-oriented manufacturing sectors in India, aligning with the government’s “Make in India” and “Atmanirbhar Bharat” initiatives.
However, experts caution that the long-term impact will depend on how smoothly the agreement is implemented and whether reciprocal access benefits Indian businesses in practice.
Conclusion: Positive Signal, Details Awaited
The India-US trade agreement, particularly the reduction of tariffs to 18 per cent, has been welcomed by the government as a step forward in bilateral economic relations.
Finance Minister Nirmala Sitharaman’s comments underline the administration’s optimism, while also signalling that comprehensive details are still being finalised.
As both countries move toward implementation, exporters and industry bodies will closely watch how the agreement translates into real gains on the ground.
Our Thoughts
The tariff cut under the India-US trade deal marks a significant moment for Indian exporters and manufacturers. By lowering duties, the agreement has the potential to strengthen India’s position in one of the world’s largest markets.
However, headline announcements alone are not enough. The success of the pact will depend on clear rules, fair implementation, and sustained cooperation between regulators and businesses. If managed well, the deal could support long-term growth, job creation, and stronger global integration for India’s economy.