By Keerthi Ramesh
A newly announced trade agreement between India and the United States that lowers U.S. tariffs on Indian products is expected to strengthen Indian exports and support the government’s “Make in India” initiative, External Affairs Minister S. Jaishankar said Tuesday.
Under the pact unveiled after a phone call between Prime Minister Narendra Modi and U.S. President Donald Trump, Washington agreed to cut its reciprocal tariff on Indian goods to 18%, down from a base rate of 25%.
The reduction also effectively eliminates an additional punitive levy that had pushed India’s tariff burden to 50% on many exports. The pact takes effect immediately, U.S. officials said.
Jaishankar described the tariff adjustment as a catalyst for job creation and economic growth in both countries. In a post on social media platform X, he said the accord would “spur growth and promote innovation” while bolstering India’s manufacturing footprint. “It will strengthen ‘Make in India’ endeavours and encourage trusted technology ties,” he added.
Leaders in both capitals cast the agreement as a milestone in bilateral economic relations. Modi thanked Trump, saying the lower tariff rate would help Indian exporters compete more effectively in one of the world’s largest consumer markets.
Trump framed the deal as a reflection of strong personal ties with India’s leadership and mutual respect between the two democracies.
The tariff cut positions India more favourably against several regional competitors. Analysts note that the U.S. levy on Indian goods now stands below those on products from countries such as Vietnam, Bangladesh and Indonesia and significantly below China’s rate. The competitive shift could benefit sectors like textiles, leather goods and some engineering products that were previously hit hard by higher duties.
Read: India-US newest trade deal could cut tariffs from 50% to 15% (October 22, 2025)
Industry reaction has been broadly positive, with export associations and market analysts applauding the shift. They contend that lower U.S. duties will help revive sectors that saw export orders dry up amid earlier tariff hikes, while global investors have responded with optimism.
Not all barriers are erased. Certain U.S. tariffs, particularly on steel and aluminium imports, remain high under separate trade measures, and experts caution that non‑tariff hurdles could still affect some Indian exporters. Nevertheless, the broader reset is viewed as a step toward deeper economic cooperation and greater integration into global supply chains.
The agreement comes at a time of evolving global trade dynamics, with India also pursuing other free‑trade arrangements, including a recently concluded pact with the European Union. For New Delhi, the strategic emphasis remains on expanding market access for domestic manufacturers while balancing geopolitical priorities.