India-US trade deal is about tariff cuts, says FM Sitharaman as US lowers duties to 18%

Union Finance Minister Nirmala Sitharaman has stated that the recently announced agreement between India and the United States is centred on the reduction of tariffs. India and the United States have reached a trade agreement under which Washington will reduce reciprocal tariffs on Indian goods to 18%, US President Donald Trump said on Monday, February 3, following a phone call with Prime Minister Narendra Modi.

In an interview with PTI Videos, Sitharaman said the tariff announcement, in which Indian exports to the US will attract a lower 18% tariff, is a "good auguring" for India.

FM Sitharaman directly addressed the focus of the deal, stating, "It is about tariff reduction". Her statement clarifies that the underlying objective of the agreement is specifically to address tariff-related concerns, rather than broader regulatory or structural reforms. 

Although the minister highlighted the emphasis on tariff reduction, no further details on specific tariff rates or additional policy mechanisms were disclosed at this stage. 

India-US BTA

A joint statement on the India–US trade agreement is expected to be released within the next two to three days, official sources told Business Today on Tuesday. Under the deal, India is expected to import goods worth around $500 billion from the United States over the next five years, the sources said. Of this, data centres alone are projected to account for nearly $20 billion.

Officials also indicated that India could receive zero-duty benefits in several categories as part of the agreement.

Addressing a press briefing, Commerce and Industry Minister Piyush Goyal said Prime Minister Narendra Modi had consistently ensured that India’s sensitive sectors were safeguarded during negotiations. “PM Modi has always ensured protection of the agriculture and dairy sectors,” Goyal said, adding that under the India–US trade deal, “sensitive sectors like agriculture and dairy have been protected.”

Goyal added that the agreement is now in the final stages of detailing, after which a joint statement will be issued once technical formalities are completed. “I can assure the people of India that this agreement will protect the interests of every Indian, create significant opportunities, and safeguard sensitive sectors,” he said.

Almost after a year

New Delhi and Washington have been negotiating a bilateral trade agreement (BTA) since February last year, with an ambitious target of scaling bilateral trade to $500 billion by 2030, up from about $191 billion currently. The United States is India’s largest trading partner, with two-way trade valued at $131.84 billion.

With the India–US trade pact and a free trade agreement with the European Union concluded just days ago, India has, for the first time, secured comprehensive trade agreements with two of the world’s largest trading blocs. In addition, India has signed four other trade deals, including agreements with the UK, Oman and New Zealand, further expanding its global trade footprint.

Announcing the agreement, President Donald Trump said the decision was taken in consideration of his relationship with Prime Minister Narendra Modi. “Out of friendship and respect for Prime Minister Modi and at his request, we have agreed to a trade deal between the United States and India, effective immediately. Under the agreement, the United States will lower the reciprocal tariff on Indian goods from 25% to 18%,” Trump wrote on Truth Social on Monday night, India time. He added that India would also move to reduce its tariffs and non-tariff barriers on US goods to zero.

Responding to Trump’s post, Prime Minister Modi expressed his appreciation for the announcement. “Wonderful to speak with my dear friend President Trump today,” Modi wrote on X after the call. “I am delighted that ‘Made in India’ products will now face a reduced tariff of 18%. My heartfelt thanks to President Trump on behalf of 1.4 billion Indians for this wonderful decision. When two large economies and the world’s largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation.”