An important trade agreement has been announced between India and America, which can give a new direction to the relations between the two countries. This news came to light on February 2, 2026, when US President Donald Trump gave this information by posting a post on his social media platform Truth Social. He said that this deal was reached after a phone conversation with Prime Minister Narendra Modi and it comes into effect with immediate effect.
Trump reduced tariffs and instructed not to buy oil from Russia
Trump explained in detail in his post that the reciprocal tariff imposed on goods coming from India to America has been reduced from 25 percent to 18 percent. Apart from this, the additional 25 percent penalty tariff imposed earlier due to purchase of Russian oil will also be removed. In this way, the total tariff had earlier reached about 50 percent, but now it will be 18 percent. Trump claims that India will now stop purchasing Russian oil and will instead buy more oil and energy from Venezuela. He said that this will help in ending the Russia-Ukraine war soon.
Trump further wrote that India will purchase more than $500 billion of energy, technology, agricultural products, coal and other goods from America. He also said that India will move towards reducing its tariff and non-tariff barriers on American goods to zero. Trump called Modi a good friend and said that India will now buy American goods at a higher level.
How did PM Modi respond to Trump’s announcement?
Prime Minister Narendra Modi also reacted to this and posted on social media. He wrote that it was great to talk to President Trump and he is happy that there will now be a lower tariff of 18 percent on Indian-made products. PM Modi, on behalf of the 1.4 billion people of India, thanked Trump for this wonderful announcement.
He said that when two big economies and the world’s largest democracy work together, people will benefit a lot and new opportunities for mutual cooperation will open up. PM Modi praised Trump’s leadership ability and said that it is necessary for global peace, stability and prosperity. He expressed hope that the partnership between the two countries will reach unprecedented heights.
Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18%. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement.
When two large economies and the…
— Narendra Modi (@narendramodi) February 2, 2026
No mention of not buying oil from Russia
However, PM Modi’s statement only talks about tariff reduction. There is no clear mention of things like shutting down Russian oil, purchasing $500 billion or reducing our tariffs to zero. Union Minister Ashwini Vaishnav also described the deal as a win-win and said that it will benefit the citizens and industries of both the countries.
From the American side, a White House official has confirmed that punitive tariffs related to Russian oil are being removed. A US State Department official also welcomed the deal and said it would deepen industrial cooperation and accelerate joint projects in critical minerals and technology.
Why is purchasing $500 billion difficult?
It is difficult for India to purchase $500 billion from America because the current trade level is very low. India’s US imports in FY25 were only $45.69 billion and the total trade between the two countries was $132.2 billion. In such a situation, purchasing $500 billion in a financial year neither seems obvious nor practical.
There was a rift between India and America for the last one year
This agreement has come after tense negotiations that have been going on for the last one year. Talks began after PM Modi’s visit to the US last February, which included six formal visits and several informal discussions. There were differences over Russian oil purchases, immigration rules, defense relations and other issues. America had imposed up to 50 percent tariff on Indian goods. But now this is a big relief for Indian exporters because goods like textiles, electronics will now be cheaper in America and can be sold more. Both the leaders are looking at this on the basis of friendship and respect. More information is expected to emerge in the coming days, which may prove beneficial for both the countries.
