The United States and India are approaching a trade deal that could mark a major shift in bilateral relations, following months of tensions caused by Indian imports of Russian oil.
According to the publication Mint, Washington is ready to significantly reduce tariffs on Indian exports, while New Delhi is expected to limit purchases of oil from Russia.
Tariff Reductions for Indian Products
Sources cited by Mint stated that the Trump administration could lower customs duties on Indian products to 15-16%, from the current level of 50%, imposed in August as a "punishment" for continuing trade with Russia.
In return, India could increase import quotas for non-genetically modified corn from the U.S. and is set to buy more ethanol, dairy products, and poultry feed.
The negotiations also include a mechanism through which both parties will be able to periodically review the level of tariffs and market access, in an attempt to stabilize trade relations.
"Not Going to Buy Too Much Oil from Russia"
Relations have eased after a Diwali phone call, the Hindu festival of lights, between President Donald Trump and Prime Minister Narendra Modi. "We talked about many things, but especially about trade. He's not going to buy too much oil from Russia. He wants to see the war end, just like me," Trump told journalists aboard Air Force One, according to Telegraph India.
However, Trump warned that if New Delhi does not reduce purchases of Russian oil, "it will continue to pay massive tariffs." In a message on X, Modi confirmed the call, thanking Trump for the "warm Diwali greetings" and emphasizing that the two countries "must stand united against terrorism in all its forms."
Indian Ministry Denies, but Negotiations Continue
Indian representatives were initially hesitant to confirm the discussions. "I have no knowledge of such a call between Trump and Modi," said the spokesperson for the Ministry of External Affairs at a press conference, adding that "our import policy is guided by the objective of protecting the interests of Indian consumers in a volatile energy context."
India has become the world's second-largest buyer of Russian oil, after China. In the first half of this year, imports reached 1.6 million barrels per day, compared to just 50,000 in 2020, according to data from the U.S. Energy Administration cited by CNBC.
Trump-Modi Relationship Revitalized Ahead of ASEAN Summit
The trade deal is expected to be announced at the ASEAN summit in Kuala Lumpur at the end of the month, if both parties reach an agreement on sensitive sectors, such as agriculture and energy.
In recent weeks, Trump has taken a more conciliatory tone towards India. "Modi is a great friend. We have a very good relationship," said the American leader.
Trade between the U.S. and India reached a record level of $132.2 billion in the fiscal year ending in March 2025, according to data from the India Brand Equity Foundation. Indian exports to the U.S. increased by 11.6% to $86.5 billion, while imports from the U.S. rose by 8% to $45.7 billion.
In February, the two countries had set a goal of doubling the volume of trade to $500 billion by 2030, but negotiations stalled after India refused to fully open its agricultural sector.
Relations deteriorated further after Modi's meeting with Vladimir Putin and Xi Jinping in Beijing, a gesture interpreted in Washington as a sign of closer ties with Moscow.