The United States and India have announced a trade agreement under which Washington will lower tariffs on Indian goods from 25% to 18%, with the potential for a waiver of an additional 25% tariff imposed due to India’s imports of Russian oil.
U.S. President Donald Trump stated that, in return, India will reduce tariffs on American goods to zero and commit to purchasing $500 billion worth of U.S. products, though no specific industry details or timeline were disclosed.
Indian Prime Minister Narendra Modi confirmed the revised 18% tariff rate in a post on X (formerly Twitter), calling the agreement a step toward restoring stability and momentum in bilateral relations. However, he did not mention Russian oil or Trump’s remarks about India eliminating tariffs on U.S. goods.
In May 2025, the U.S. announced that, effective August 1, 2025, it would impose a 25% tariff on all goods imported from India and an additional 25% tariff on India’s purchases of Russian oil, escalating tensions between the two nations.
The tariff reduction is expected to support Indian exports. Government data shows that despite the impact of the late-August tariff hike, India’s exports to the U.S. from January to November 2024 still grew by 15.9% year-on-year to $85.5 billion, while imports during the same period stood at $46.1 billion.
Clean energy manufacturers are also set to benefit. Prashant Mathur, CEO of solar manufacturer Saatvik Green Energy, stated that the tariff cut represents a “strategic inflection point” for the industry.
Mathur said, “India’s solar exports—including cells and modules—already amount to billions of dollars, with the U.S. being our most critical overseas market. A 7-percentage-point tariff reduction significantly enhances cost competitiveness, making U.S. projects more profitable and creating new demand for high-efficiency products manufactured in India.”
Mathur added that this move also strengthens India’s position as a reliable alternative manufacturing base, alleviating concerns about tariff evasion by Chinese producers.
Gyanesh Chaudhary, Managing Director of Vikram Solar, described the agreement as a “structural inflection point” for India’s energy and clean technology exports, noting improvements in price efficiency, supply certainty, and long-term demand visibility.
However, the agreement may not protect all Indian solar exports. The expected implementation of Section 232 tariffs on polysilicon in the U.S. means some Indian photovoltaic exports could face higher tariffs. Additionally, the U.S. has initiated anti-dumping (AD) and countervailing duty (CVD) investigations on crystalline silicon photovoltaic cells (whether or not assembled into modules) imported from India, Indonesia, and Laos. The investigation proposes a 123.04% dumping margin for India, though the investigation is ongoing and no tariffs have been imposed yet.
According to U.S. government data, the U.S. remains India’s largest trade partner, with total goods and services trade growing over 8% in 2024 to $212.3 billion. U.S. goods exports to India were $41.5 billion, while services exports grew 16% to $41.8 billion. Whether this framework can overcome political friction now depends on details yet to be negotiated.
