The US and India have announced a trade deal under which Washington will cut tariffs on Indian goods to 18% from 25% and is expected to waive an additional 25% levy imposed over India’s Russian oil imports.
US president Donald Trump said India would, in return, cut tariffs on US goods to zero and commit to purchasing US$500 billion of US products, although no sector-level details or timelines were disclosed.
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Indian prime minister Narendra Modi confirmed the revised 18% tariff rate in a post on X, describing the agreement as a step toward restoring stability and momentum in bilateral ties, but stopped short of referencing Russian oil or Trump’s assertion that India would eliminate levies on US goods.
Tensions escalated in May 2025 after the US announced a 25% tariff on all Indian imports entering the country from 1 August 2025, alongside an additional 25% levy linked to India’s purchases of Russian oil.
The tariff reduction is expected to support Indian exports. While shipments to the US were hit following tariff hikes in late August, exports still rose 15.9% year-on-year to US$85.5 billion in January-November, while imports reached US$46.1 billion, according to government data.
Clean energy manufacturers also stand to gain. Prashant Mathur, CEO of solar manufacturer Saatvik Green Energy, said the tariff cut represents a “strategic turning point” for the sector.
“India’s solar exports, including cells and modules, have already reached billions of dollars, with the US as our most important overseas market,” Mathur said. “The seven-percentage-point tariff reduction materially improves cost competitiveness, making US projects more profitable and creating new demand for high-efficiency, Made-in-India products.”
Mathur added that the move strengthens India’s position as a credible alternative manufacturing base amid concerns around tariff circumvention by Chinese producers.
Vikram Solar managing director Gyanesh Chaudhary described the agreement as a “structural inflection point” for India’s energy and cleantech exports, citing improved price efficiency, access certainty and long-term demand visibility.
However, the deal may not shield all Indian solar exports. US Section 232 tariffs on polysilicon are expected to come into force, meaning portions of India’s PV exports may to face elevated duties. In addition, the US has launched antidumping (AD) and countervailing duty (CVD) investigations into crystalline silicon PV cells, whether or not assembled into modules, imported from India, Indonesia and Laos. The investigation proposes a dumping margin of 123.04% for India, although it is ongoing and no duties have yet been imposed.
The US remains India’s largest trading partner, with total goods and services trade rising more than 8% to US$212.3 billion in 2024, according to US government data. US goods exports to India reached US$41.5 billion, while services exports rose 16% to US$41.8 billion. Whether the framework can overcome political frictions now depends on the yet-to-be-negotiated details.
