A late call India time on Monday between Indian Prime Minister Narendra Modi and US President Donald Trump sealed the trade deal. Details are still sketchy but according to social media posts by the leaders, the US will reduce the reciprocal tariffs from 25% to 18%. The 25% punitive tariff that was levied for India’s Russian oil purchase is also to go—effectively reducing US tariff on India’s exports from 50% to 18%. Lower than tariffs on countries such as Vietnam, this puts Indian exports at an advantage.
But several questions remain unanswered. Here are six of them:
1. Has India agreed to end Russian oil purchases?
Trump in his social media post has claimed that India has agreed to end Russian oil purchases. But Modi’s statement does not mention it and focuses just on the tariff cut. Has India agreed to cut or reduce Russian oil purchases which accounted for over 30% of its needs (1.5 million barrels a day)? Did Trump agree to drop the punitive 25% tariff based on this assurance?
2. Will oil from the US and Venezuela replace Russian oil?
That is what Trump alluded to but looks impractical. It is very unlikely that the US that accounts for 7% of Indian crude imports and Venezuela, which is just cranking up its oil production, will be able to meet India’s needs in the short to medium term. Also, Venezuelan oil is of heavy variety and it is not clear if all Indian refineries can process them. Even if the share of American and Venezuelan oil increases in India’s import basket, it has to be over time.
3. Has India offered duty free access to US imports?
Trump has claimed that India will levy 0% duty on imports from the US and also remove all non-tariff barriers. That is a tall ask. Has India agreed to such a demand? Which are the sectors such imports will be duty free?
4. Has India opened its agricultural sector?
The US secretary for agriculture Brooke Rollins has said that the “US will export more American farm products to India’s massive market, lifting prices and pumping cash into rural America”. It is not clear what farm produce exactly will be covered. Given that more than half of India’s population depends on farming as a primary source of employment, agriculture has been a red line for New Delhi in trade negotiations that prevented the deal from being agreed to so far. Further, much of US’s agricultural produce is genetically modified and it will not be easy for India to import them.
5. Does the tariff reduction also include those levied under section 232?
President Trump used section 232 (national security) to levy tariffs on steel, aluminum, copper, automobiles, and auto components. This was over and above the reciprocal tariffs. It is not clear if Monday’s announcements include or exclude these tariffs.
6. Can India buy goods worth $500 billion from the US?
Trump has said that India will buy goods worth $500 billion from the US including oil, defence equipment, agricultural products, and more. No time lines have been given for this. In 2025, up to November, India’s imports from the US were just $42 billion, as per US Census Bureau data.