India, US Close to Finalising Long-Delayed Trade Deal; Tariffs to Drop as India Agrees to Scale Back Russian Oil Imports

India and the United States are close to finalising a long-pending trade agreement that would significantly lower US tariffs on Indian goods — from around 50 per cent to between 15 and 16 per cent — Mint reported, citing three people familiar with the talks.

The proposed deal, which centres on energy and agriculture, could also see India gradually reducing its imports of Russian crude oil.

US President Donald Trump said on Tuesday that he spoke with Prime Minister Narendra Modi, with trade forming the bulk of their discussion. Trump said the two leaders also discussed energy, claiming Modi had assured him that India would limit oil purchases from Russia.

India’s continued imports of Russian crude have previously triggered a 25 per cent punitive levy on Indian exports — on top of the reciprocal 25 per cent tariffs announced in April. Russia currently accounts for roughly 34 per cent of India’s crude oil imports, while the US supplies about 10 per cent of India’s total oil and gas needs by value.

Under the trade framework, India may open its markets further to US agricultural products such as non-genetically modified (non-GM) corn and soymeal. New Delhi is also seeking a provision for periodic reviews of tariffs and market access, according to the Mint report.

The two sides are expected to announce the final deal during the ASEAN Summit later this month, when Modi and Trump meet in person.

As part of the agreement, India may raise its import quota for non-GM maize from the US — currently capped at 0.5 million tonnes annually — while maintaining the existing 15 per cent duty. The move aims to meet growing domestic demand from the poultry feed, dairy, and ethanol industries.

Talks are also progressing on allowing imports of non-GM soymeal for both human and livestock consumption, though there remains no final clarity on tariff cuts for dairy products — including premium cheese — a key US demand.

On energy, India may commit to gradually reducing its dependence on Russian crude, while expanding ethanol imports from the US. Washington, in turn, is expected to offer concessions on energy trade, with Indian state-run oil companies informally encouraged to diversify their sourcing toward American suppliers.

Officials have reportedly informed Moscow that India will scale back its Russian oil purchases, though US crude has yet to match the deep discounts offered by Russia. Trump has reportedly made reducing Russian oil imports a precondition for the trade pact.

Speaking at a Diwali celebration in the Oval Office, Trump reiterated his claim that Modi had agreed to curb Russian energy imports. “He’s not going to buy much oil from Russia. He wants to see that war end as much as I do,” Trump said.

However, India’s Ministry of External Affairs said it was unaware of such a conversation and reaffirmed that any reduction in Russian oil imports would be gradual. New Delhi has maintained that it will continue purchasing Russian oil as long as it remains economically beneficial.

Since the start of the Ukraine war in 2022, India has emerged as one of the largest buyers of discounted Russian crude, which now accounts for about one-third of its total oil imports — despite Washington’s efforts to restrict those flows.