Washington DC [US], February 3 : Highlighting growing momentum in India's economic alignment with Western partners following the announcement of a bilateral trade agreement, Partner Asia Group Nisha Biswal noted that the deal could ease tariff tensions and open the door for deeper cooperation between India and the United States.
Elaborating on the development, Biswal said, "We heard the announcement from both President Donald Trump and Prime Minister Narendra Modi that they have come to an agreement on the US-India bilateral trade agreement, at least the phase one agreement. Coming on the heels of a very consequential EU-India free trade agreement, this is a big move for India as it seeks to open up its trade frontiers with the EU and the US. There are ongoing discussions with Canada, and earlier this year, we saw the India-UK deal. India is making a bold move to align economically with the West."
She further said that for both India and the US, the agreement removes several irritants, particularly the earlier 50 per cent tariffs that had impacted India, adding that the overall tariff rate now stands at 18 per cent, with a pathway toward zero tariffs on several tariff lines.
Addressing concerns around India's imports of Russian oil and the durability of the agreement, Biswal said sustainability would depend on how both governments approach implementation. "As new energy sources become available, India can diversify away from Russia if necessary. Whether this is a sustainable agreement will depend on the determination of both governments to make it work. This is a phase one agreement, so there is still a lot of work ahead to reach a more comprehensive trade agreement. The US-India agreement is a significant step, but it's not yet the full free trade agreement," she said.
Her remarks followed US President Donald Trump's announcement of a trade deal with India, months after imposing 50 per cent tariffs on Indian goods in August 2025. The agreement, unveiled on Trump's social media platform Truth Social, features significant tariff reductions and includes claims that India would halt purchases of Russian oil. Trump had earlier levied a 50 per cent tariff on India, with 25 per cent linked to crude imports from Russia, as administration officials repeatedly alleged that India's oil purchases helped finance Russia's war against Ukraine.
Confirming the development, Prime Minister Narendra Modi posted on X, "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. When two large economies and the world's largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation. President Trump's leadership is vital for global peace, stability, and prosperity. India fully supports his efforts for peace. I look forward to working closely with him to take our partnership to unprecedented heights."
Trump, in his Truth Social post, said, "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. We spoke about many things, including Trade and ending the War with Russia and Ukraine. He agreed to stop buying Russian Oil, and to buy much more from the United States and, potentially, Venezuela. This will help END THE WAR in Ukraine, which is taking place right now, with thousands of people dying each and every week!"
Detailing the terms of the agreement, Trump added, "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. The Prime Minister also committed to 'BUY AMERICAN,' at a much higher level, in addition to over $500 BILLION DOLLARS of U.S. Energy, Technology, Agricultural, Coal, and many other products. Our amazing relationship with India will be even stronger going forward. Prime Minister Modi and I are two people that GET THINGS DONE, something that cannot be said for most."
Against this backdrop of expanding Western economic engagement, India and the European Union formalised multiple agreements on January 27 in the presence of Prime Minister Modi, Ursula von der Leyen and Antonio Costa.
Notably, both sides also agreed on a strategy document titled 'Towards 2030 - A Joint India-European Union Comprehensive Strategic Agenda', reflecting the expanding scope of India-EU strategic cooperation.
Among the agreements exchanged was the political declaration on the conclusion of negotiations on the India-EU Free Trade Agreement, signed by Piyush Goyal and Maros Sefcovic.
The India-EU Security and Defence Partnership document was signed by Kaja Kallas and S Jaishankar, while the comprehensive framework on mobility was signed by Sefcovic and Jaishankar, underlining the wide-ranging and multifaceted nature of India-EU strategic cooperation.