President Donald Trump on Monday announced a new ‘trade deal’ with India after a phone call with Prime Minister Narendra Modi. Under the agreement, Washington will roll back some of the tariffs on Indian goods after New Delhi agreed to replace Russian oil with imports from the U.S. and Venezuela, President Trump said.
“President Donald Trump said Monday that he plans to lower tariffs on goods from India to 18%, from 25%, after Indian Prime Minister Narendra Modi agreed to stop buying Russian oil,” the Associated Press reported. “The move comes after months of Trump pressing India to cut its reliance on cheap Russian crude. India has taken advantage of reduced Russian oil prices as much of the world has sought to isolate Moscow for its February 2022 invasion of Ukraine.”
Prime Minister Modi “agreed to stop buying Russian Oil, and to buy much more from the United States and, potentially, Venezuela,” President Trump said in a statement after the phone call. “This will help END THE WAR in Ukraine,” he assured.
In August 2024, President Trump doubled the import duty on all Indian imports to 50 percent, a move aimed at pressuring India to stop buying Russian oil. India, the second-largest buyer of Russian oil after China, has purchased $168 billion worth of Russian oil since the start of the Russia-Ukraine war in February 2022, according to trade data.
Indian refineries earned substantial profits by importing discounted Russian crude oil. The Fortune Magazine (India) noted that “Before the Russia–Ukraine war, India sourced less than 2% of its crude from Russia. Between January and September 2025, that figure surged to an average of 1.73 million barrels per day—around 30–35% of total imports—making Russia India’s largest supplier.”
Prime Minister Narendra Modi did not mention cutting oil imports from Russia in his statement, but major Indian refineries have been reducing Russian oil intake since U.S. tariffs were raised six months ago, according to media reports.
The Indian government is yet to issue a formal directive on this issue. “Indian refiners have not been told by the government to stop buying Russian oil and would need a wind-down period to complete purchases already in process, two refining sources said on Tuesday, following a trade deal with Washington,” Reuters reported Tuesday.
India, while seeking a strategic alliance with the U.S., remains heavily dependent on Russian military imports. Approximately 60-70 per cent of military equipment is of Russian origin, ranging from Soviet-era artillery pieces to newly inducted air defense systems.
The deal will also lower the existing trade deficit. New Delhi will buy “over $500 BILLION DOLLARS of U.S. Energy, Technology, Agricultural, Coal, and many other products,” President Trump announced.
India, traditionally a protectionist country, will open its domestic market for U.S. trade. “They will likewise move forward to reduce their Tariffs and Non Tariff Barriers against the United States, to ZERO,” the president noted.
Indian newspaper Business Times reported that “India has agreed to purchase petroleum, defence equipment and aircraft from the United States, while also partially opening its tightly regulated agriculture sector under a trade agreement.”
The deal is seen as a win for India, the world’s fourth-biggest economy. “Investors in Indian assets rejoiced at the surprise news that Prime Minister Narendra Modi had finally reached a deal with President Donald Trump on trade. Stocks jumped the most since 2021, while the rupee posted its biggest gain in three years,” Bloomberg reported Tuesday. “The latest development seems a win for Modi. US tariffs will be lowered to 18% from a punitive 50%, which is a lower levy than rivals Pakistan, Bangladesh or Vietnam achieved. The deal also takes the wind out of the sails of Modi’s political opposition, who had mocked India’s leader for allowing Trump to push such high tariffs on India in the first place.”
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