After months of uncertainty, there appears to be good news on the India-US trade front. US President Donald Trump has announced that tariffs on Indian goods will be lowered from 50 per cent to 18 per cent, a pronouncement acknowledged by Prime Minister Narendra Modi. This could materially enhance the competitiveness of Indian exports in the US market and put India in a better position vis-à-vis its regional competitors such as Bangladesh, Vietnam, Sri Lanka and Pakistan, all of whom face US tariff rates of 19-20 per cent; the new rate is also far below China’s tariff level of 34-37 per cent.
Yet, the real situation is far from clear. First, there is no indication that the new tariff levels are coming into effect immediately. India has since asserted that the details of the deal must still be worked out by negotiating teams and embodied in a joint statement that would then be formally signed. Consequently, the timing and mechanics of any tariff reduction remain undefined. Second, Trump’s claim that India has agreed to significantly open market access for US agricultural goods, has been disputed. Commerce Minister Piyush Goyal underlined that agriculture and dairy are protected in the emerging deal. However, within hours of Goyal’s statement, White House officials repeated the claim that India has agreed to greater access for US farm exports. This contradiction underscores the need for a formal joint statement that would clarify what has and has not been conceded.
Third, Trump’s unilateral declaration that India has agreed to stop buying Russian oil as part of the quid-pro-quo for lower tariffs flies in the face of the reality that India’s oil imports from Russia are unlikely to come to a complete halt any time soon. Although gradually coming down, the Russian oil imports to India are still steady at 1.1-1.3 million barrels per day. News reports quote unnamed government sources to argue that India will continue to import from non-sanctioned Russian entities. But uncertainty persists about whether India has surrendered autonomy in this important strategic decision. Fourth, there is no confirmation from India that it has agreed to reduce tariff and non-tariff barriers against the US to zero and committed to buying $500 billion worth of American goods as Trump has claimed. Indian government sources have suggested American buys of $500 billion could be staggered over a five-year period. This deserves clarification as well, especially since India’s total import basket from the US remains at about $45 billion at present.
Clarity is required in this hodgepodge of assertions, counter-assertions and hearsay. Tariff cuts are welcome news but businesses need to know not just that tariffs will fall, but when, because contracts, pricing and supply chains are negotiated months in advance. Until the text is on paper and signed, uncertainty will continue to weigh on the very businesses that this purported deal is meant to help. A social media post and hurried official clarifications are not a substitute for a formal treaty text. As the slang goes, ‘It ain’t over till the fat lady sings’!
Published on February 4, 2026