India-US trade deal explained: What we know and what remains unclear

Even as both PM Modi and Trump hailed the agreement, details on several key issues, including agriculture, India's purchase of Russian oil and the services sector, remain unclear

After nearly a year of prolonged negotiations and multiple rounds of talks, India and the United States on Monday finalised a long-awaited trade deal that lowers tariffs on Indian imports from 25 per cent to 18 per cent.

 

US President Donald Trump announced the agreement in a post on Truth Social on Monday. Prime Minister Narendra Modi also confirmed the deal, saying, “Wonderful to speak with my dear friend President Donald Trump today. Delighted that Made in India products will now have a reduced tariff of 18 per cent.”

 

However, even as both leaders hailed the agreement, details on several key issues, including agriculture, India’s purchase of Russian oil and the services sector amid Trump’s tightening immigration policies, remain unclear.

 

Here are some of the concerns that remain unanswered even after Modi and Trump clinched the deal.

Questions remain over zero tariffs

While PM Modi did not highlight details beyond the tariff reduction, Trump said India has agreed to cut its tariffs to zero and significantly increase purchases of American products.

 

“He (Modi) also committed to ‘BUY AMERICAN,’ at a much higher level, in addition to over 500 billion dollars of US energy, technology, agricultural, coal and many other products,” Trump said in his Truth Social post.

 

He also claimed that India would “reduce their tariffs and non-tariff barriers against the United States to zero”.

 

However, it remains unclear whether India has agreed to zero tariffs and zero non-tariff barriers across the board, especially in sensitive sectors such as agriculture and other regulated imports.

What about American agricultural exports to India?

In his post, Trump highlighted that India will be buying more agricultural products from the US, but there are no details on Washington’s imports of Indian produce.

 

This comes as trade talks between the two countries had reportedly stalled mainly over import duties on agricultural goods. After the US imposed 50 per cent tariffs on Indian imports in August last year, PM Modi had said India would “never compromise” on the interests of farmers, livestock rearers and fishermen, even if it meant paying a “heavy personal price”.

Will India completely stop buying Russian oil?

The Trump administration has repeatedly accused India of indirectly funding Russia’s war in Ukraine through oil purchases. Trump claimed that Modi agreed to stop buying Russian oil and instead purchase more oil from the US and possibly Venezuela.

 

“He agreed to stop buying Russian oil, and to buy much more from the United States and, potentially, Venezuela. This will help end the war in Ukraine, which is taking place right now,” Trump said.

 

However, Prime Minister Modi made no reference to Russian oil in his public message. He only said that “India fully supports” Trump’s efforts for peace.  India has been gradually cutting its Russian oil imports. According to Reuters, Russian oil imports fell to their lowest level in two years in December 2025. State-run Hindustan Petroleum, Mangalore Refinery and Petrochemicals and ‍private ‌refiners HPCL-Mittal Energy ​Ltd have already stopped buying Russian oil.

 

If India were to stop buying Russian oil completely, it would lose access to steep discounts. Domestic refiners would also face challenges in replacing supplies from Russia, currently India’s largest oil supplier.

 

Business Standard reported earlier that discounts on Russian crude surged more than sixfold to over $10 a barrel from mid-2025, calculated off Dated Brent on a delivered basis, after Washington imposed its toughest sanctions on Russian oil producers in November.

What will happen to India’s services exports?

Another major concern is the services sector. In recent trade agreements signed by India, including the trade deal with the European Union and New Zealand, services and people-to-people ties have been central.

 

However, the Trump administration’s tightening of immigration policies, including sharply raising the annual H-1B visa fee to $100,000, has made it difficult for US companies to hire Indian professionals, creating new barriers for India’s services exports.

 

Notably, neither Trump or Modi referred to the services sector in their public announcements on Monday.

 

For now, the India-US trade deal settles the political headline but leaves critical economic questions open. Clear sectoral commitments, legal texts and timelines will determine whether the agreement delivers tangible gains or merely postpones difficult trade-offs across farms, fuel and services.