India-US Trade Pact Expected to Boost Exports in Textiles, Jewellery, Engineering Sectors

After months of tension between the US and India, President Donald Trump of the US and Indian Prime Minister Narendra Modi announced a surprise trade deal on February 2, 2026. As a result of this deal, the US agreed to reduce its tariff rates from 50% to 18% for goods imported from India, as well as eliminate an additional 25% punitive duty on Russian oil purchases.

Trump’s tweet claimed that the agreement with Modi, the Prime Minister of India, included an agreement to stop purchasing Russian oil, buy oil from the US and potentially Venezuela, reduce tariffs on US goods to zero, and buy $500 billion of goods from the US. However, the statement of PM Modi only confirmed an 18% cut in tariffs. Indian officials have not confirmed some details of the agreement, and no written document has been made public.

The agreement appears to be linked to a confidential meeting between National Security Advisor Ajit Doval and US Secretary of State Marco Rubio in September 2025. According to a Bloomberg report, Doval clearly conveyed to Rubio that India would not bow to pressure from the Trump administration and was willing to wait until his term if necessary, as India has faced hostile US administrations before. Doval said the US should reduce public criticism of India to improve relations.