Russia Oil Exit: India Agrees to US Trade Deal, Trump Cuts Tariffs

India has agreed to a new trade deal with the United States that will significantly reshape its tariff policy and energy sourcing, following a telephone conversation between Prime Minister Narendra Modi and US President Donald Trump. As part of the understanding announced by Trump, New Delhi will stop buying oil from Russia and instead expand energy imports from the United States.

Trump said the agreement marks a major reset in India-US economic relations. Under the deal, Washington will reduce the reciprocal tariff on Indian goods from 25 per cent to 18 per cent with immediate effect. In return, India has committed to lowering its tariffs and non-tariff barriers on American exports to zero over time and sharply increasing purchases of US products.

A key element of the deal is India's decision to move away from Russian oil, which Trump linked to broader efforts to end the Russia-Ukraine war. According to Trump, reduced Indian energy purchases from Russia could have an impact on the conflict, while increased imports from the US would strengthen bilateral ties. Trump also said India may source additional oil from Venezuela as part of its diversification strategy.

The United States had earlier imposed steep reciprocal tariffs on Indian exports, placing India among its most heavily taxed trade partners. Tensions had further increased due to an additional duty linked to India's continued imports of Russian crude. The new agreement appears to ease those pressures by combining tariff relief with changes in India's energy policy.

Trump said India has also agreed to substantially raise imports of American goods across sectors such as energy, agriculture, technology and coal, with total purchases expected to exceed $500 billion over the coming years. He described the outcome as the result of a friendly and respectful conversation with Modi and said the deal would deepen the strategic partnership between the two countries.

The announcement highlights how trade negotiations are increasingly tied to geopolitical considerations, including energy security and the Ukraine war. If implemented as outlined, the deal would mark a significant shift in India's trade and energy posture, while strengthening its economic alignment with the United States.