India-US Trade Deal: Big headline, unfinished business? Key takeaways and unanswered questions

India-US Trade Deal: After nearly a year of prolonged negotiations and multiple rounds of talks, India and the United States on Monday clinched a long-awaited trade agreement that lowers tariffs on Indian imports from 25 per cent to 18 per cent, marking a significant easing of trade tensions between the two countries.

US President Donald Trump announced the deal in a post on Truth Social, while Prime Minister Narendra Modi confirmed the agreement shortly after. “Wonderful to speak with my dear friend President Donald Trump today. Delighted that Made in India products will now have a reduced tariff of 18 per cent,” Modi said.

The agreement brings relief to Indian exporters after Washington had imposed steep tariffs last year, including a punitive duty linked to India’s purchase of Russian crude oil. However, even as both leaders publicly welcomed the deal, several key elements of the understanding remain unclear, raising questions about its broader economic impact.

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Zero tariffs claim raises questions

While Modi’s statement focused on the reduction in tariffs on Indian goods, Trump claimed that India had agreed to cut its tariffs and non-tariff barriers against the US to zero and significantly increase purchases of American products.

“He also committed to ‘BUY AMERICAN,’ at a much higher level,” Trump said, adding that India would buy over $500 billion worth of US energy, technology, agricultural, coal and other products.

What remains unanswered is whether India has agreed to zero tariffs and zero non-tariff barriers across all sectors, particularly in sensitive areas such as agriculture and other regulated imports. There has been no official clarification from the Indian side on the scope, sequencing or sectoral coverage of any such tariff reductions.

Agriculture remains a sticking point

Agricultural trade appears to be one of the biggest unresolved issues. Trump said India would increase purchases of American agricultural products, but there were no details on whether, or to what extent, US imports of Indian farm produce would benefit under the deal.

This is significant as earlier trade talks had reportedly stalled over import duties on agricultural goods. After the US imposed steep tariffs in August last year, Modi had said India would “never compromise” on the interests of farmers, livestock rearers and fishermen, even if it meant paying a “heavy personal price.”

So far, neither side has clarified how farmer interests will be balanced against any commitments to open up India’s agricultural market.

Russian oil question still unanswered

Another sensitive issue is India’s purchase of Russian oil. Trump claimed that Modi had agreed to stop buying Russian crude and instead increase purchases from the US and possibly Venezuela, linking the move to efforts to end the war in Ukraine.

However, Modi made no reference to Russian oil in his public remarks, saying only that India fully supports Trump’s efforts for peace. While India’s imports of Russian oil have declined since November 2025, they continue to play a key role in the country’s energy basket.

A complete halt in Russian oil purchases would mean losing access to steeply discounted supplies and could pose challenges for domestic refiners, as Russia remains India’s largest oil supplier.

Services sector conspicuously absent

The services sector , a very important pillar of India’s exports was notably absent from both leaders’ announcements. In recent trade agreements signed by India, including those with the European Union and New Zealand, services and people-to-people ties have been central.

This silence is striking amid the Trump administration’s tightening immigration policies, including a sharp increase in the annual H-1B visa fee to $100,000, which has made it harder for US companies to hire Indian professionals and created fresh hurdles for services exports.