INDIA–US TRADE DEAL & TARIFF REDUCTION

NEWS: After a telephone conversation between the prime minister and Donald Trump, the United States announced a reduction in tariffs on Indian goods to 18%, indicating a major positive shift in India–US trade relations

ABOUT

• In August 2025, the US imposed penalty tariffs (up to 50%) on Indian goods
• Main reasons: Trade imbalance concerns, India’s continued import of Russian oil, US pressure under its “reciprocal tariffs” policy
• Now, US tariffs on Indian “Made in India” products reduced to 18%: This lowers the burden on Indian exporters

SIGNIFICANCE

• Lower tariffs → Indian exports become more competitive
• Benefits sectors like: Textiles, engineering goods, pharmaceuticals
• Supports Make in India & export-led growth
• Strengthens partnership between two large democracies
• Reduce global dependence on China
• Important for clean energy transition & strategic autonomy