Trump Slashes Tariffs on India, Says Modi Will Stop Importing Russian Oil

US President Donald Trump on Tuesday announced a trade agreement that lowers tariffs on Indian goods, sparking a surge in Mumbai stocks, as he said Prime Minister Narendra Modi had pledged to stop importing Russian oil amid the Ukraine war.

Trump said tariffs on Indian products would be reduced to 18 per cent, down from the earlier 25 per cent “reciprocal” duties. An extra 25 per cent levy imposed over India’s purchase of Russian oil would also be removed.

The agreement appears to ease months of strain between Washington and New Delhi over India’s energy ties with Moscow, which the US says help finance the conflict in Ukraine. Trump said the deal also renewed the close relationship between him and Modi, whom he has described as one of his closest friends.

While Modi welcomed the tariff reduction and described his phone conversation with Trump as “wonderful,” he did not refer to Trump’s claim that India would halt Russian oil imports.

Trump said the new arrangement followed Modi’s request and would take effect immediately, adding that India had agreed to buy significantly more goods from the United States, including energy, technology, agricultural products and coal. He said total purchases could exceed $500 billion, though he did not provide details.

According to Trump, Modi also agreed to stop buying Russian oil and instead increase purchases from the United States and possibly Venezuela, which he said would help bring an end to the Ukraine war.

Indian markets reacted positively, with Mumbai’s Nifty index jumping nearly five per cent at the opening of trading.

Modi was among the earliest world leaders to visit the White House after Trump returned to office, but negotiations on a trade deal had stalled largely due to India’s continued imports of Russian oil. Russia remains a major supplier, accounting for about 36 per cent of India’s crude oil imports in 2024, roughly 1.8 million barrels per day.

Trump has previously claimed that Modi made similar promises last year, though no agreement followed at the time. In contrast, Modi said on social media that he was pleased Indian-made products would now face an 18 per cent tariff, without mentioning oil.

Analysts say a recent trade agreement between India and the European Union may have helped prompt Washington’s move. However, experts caution that the impact of the deal will depend on the final details and how India balances its longstanding relationship with Russia.

Modi added that Trump’s leadership was important for global peace, stability and prosperity. Trump has also repeatedly said he played a key role in ending a brief military clash between India and Pakistan earlier this year.