In a significant shift in US-India trade relations, President Donald Trump has lifted the 25% additional tariff on Indian goods that had been imposed last year due to India’s continued purchase of Russian oil. The rollback, effective February 7, 2026, is expected to provide major relief to Indian exporters and signal a thaw in economic tensions between the two nations.
The US had originally imposed the punitive tariff to discourage India from importing discounted Russian crude, which Washington viewed as undermining global sanctions. Under the new arrangement, India has committed to stop both direct and indirect purchases of Russian oil, addressing a longstanding US concern.
Industry observers say the move will benefit key sectors such as textiles, pharmaceuticals, jewellery, chemicals, and machinery, which faced higher costs and reduced competitiveness under the extra levy. Exporters anticipate a smoother access to the US market, which remains one of India’s largest trading partners.
The tariff removal is part of a new interim trade framework agreed upon by both countries. Under this framework, the US will reduce general tariffs on Indian goods to around 18%, while India will increase imports of US products — including energy, aircraft components, and technology — valued at up to $500 billion over five years.
The framework also covers defence cooperation, supply chain collaboration, and removal of non-tariff trade barriers, particularly in technology and medical sectors. Analysts say this understanding not only enhances bilateral commerce but also lays the groundwork for a comprehensive Bilateral Trade Agreement in the near future.
Indian government officials and industry leaders have welcomed the development, describing it as a significant boost for exporters and a step toward closer economic and strategic ties. The agreement is expected to strengthen cooperation between the two nations amid shifting global trade dynamics and provide long-term stability for businesses on both sides.
With the rollback of the extra tariff and the launch of the trade framework, US-India economic relations enter a new phase, offering opportunities for growth, increased market access, and a stronger strategic partnership.
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