An important trade agreement has been announced between India and America, which can give a new direction to the relations between the two countries. This news came to light on February 2, 2026, when US President Donald Trump posted about it on his social media platform, Truth Social. He said that this deal was finalized after a phone conversation with Prime Minister Narendra Modi and it has come into effect immediately.
Trump reduced tariffs and advised not to buy oil from Russia
In his post, Trump detailed that the mutual tariff on goods coming from India to the US has been reduced from 25 percent to 18 percent. Additionally, the additional 25 percent penalty tariff imposed earlier on purchasing Russian oil will also be removed. Thus, the total tariff, which had reached almost 50 percent, will now be 18 percent. Trump claims that India will now stop buying Russian oil and will instead buy more oil and energy from Venezuela. He said that this will help in ending the Russia-Ukraine war soon.
Trump further wrote that India will buy more than $500 billion of energy, technology, agricultural products, coal and other goods from America. He also said that India will move towards eliminating its tariff and non-tariff barriers on American goods. Trump described Modi as a good friend and said that India will now buy American goods on a large scale.
What was PM Modi’s reaction to Trump’s announcement?
Prime Minister Narendra Modi also reacted to this and posted on social media. He wrote that it was great to talk to President Trump and he is happy that now there will be 18 percent less tariff on products made in India. PM Modi thanked Trump on behalf of the 1.4 billion people of India for this wonderful announcement.
He said that when two big economies and the world’s largest democracies work together, it will greatly benefit the people and open up new opportunities for mutual cooperation. PM Modi praised Trump’s leadership qualities and said that this is necessary for global peace, stability and prosperity. He expressed hope that the partnership between the two countries will reach unprecedented heights.
No mention of not buying oil from Russia
However, PM Modi’s statement only mentions the reduction in tariffs. There is no clear mention of stopping Russian oil imports, purchasing $500 billion, or eliminating tariffs. Union Minister Ashwini Vaishnav also described this deal as a win-win situation and said that it will benefit the citizens and industries of both the countries. On the US side, a White House official confirmed that punitive tariffs on Russian oil were being lifted. A US State Department official also welcomed the deal and said it would deepen industrial cooperation and accelerate joint projects in essential minerals and technology.
Why is it difficult to buy $500 billion?
It is difficult for India to purchase $500 billion from America because the current trade levels are very low. In FY25, India’s imports from the US stood at just $45.69 billion, and the total trade between the two countries stood at $132.2 billion. Therefore, purchasing $500 billion in a single financial year appears neither clear nor practical.
India-US relations were tense for the last one year
This agreement has been reached after tense negotiations that have been going on for the last one year. The talks began after PM Modi’s visit to the US last February, which included six formal visits and several informal discussions. There were disagreements over Russian oil purchases, immigration rules, defense relations, and other issues. America had imposed up to 50 percent tariff on Indian goods. But this is a big relief for Indian exporters, because goods like textiles and electronics will now be cheaper in America and can be sold in larger quantities. Both the leaders are seeing it as a relationship based on friendship and respect. More details are expected to emerge in the coming days, which may prove beneficial for both the countries.