India-US ‘trade deal’: What does India gain from it?

Earlier this week, President Donald Trump announced on social media that India and the US have agreed on a historic trade deal, or at least the broad framework for one. Under the agreement, the US will reduce tariffs on Indian goods from 50% to 18%. India will reduce tariffs on all American goods to zero, and eliminate all non-tariff barriers.

Trump also announced that India has agreed to import American goods worth $500 billion. To put this figure in perspective, American imports to India are currently at $50 billion. Also, US Secretary of Agriculture Brooke Rollins has claimed that, under this deal, India will import huge volumes of American farm products, “pumping cash into rural America”, and reducing America’s agricultural trade deficit with India, which stnds at $1.3 billion.

One year ago, US tariffs on Indian imports averaged 2-3%, while Indian tariffs on American imports ranged from 5% to 30%. India’s duties on US agri-imports averaged 39%. So, does an agreement where India’s tariffs come down to zero while American tariffs on Indian goods go up (from 2-3% in Jan 2025 to 18% in Jan 2026) constitute a ‘good deal’ for India? Will this deal fix India’s foreign capital outflows problem and restore investor sentiment? What does it mean from the vantage point of India’s key economic priority – generating employment?

Guest: Prof. Arun Kumar, Economist and Former Professor, CESP, JNU

Host: G Sampath

Edited by Shiksha Jural

Recorded and produced by Jude Weston and Shiksha Jural

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