US President Donald Trump revealed a US-India trade deal late on Monday, pledging to reduce tariffs on Indian goods to 18 percent from the previous 25 percent. He linked the agreement to Indian Prime Minister Narendra Modi's commitment to halt purchases of Russian oil due to the war in Ukraine. New Delhi also agreed to buy more than $500 billion in US energy, technology, agricultural products, coal, and other goods, while Washington removed an additional 25 percent toll on India's Russian oil imports, a White House official told AFP.

Indian markets responded enthusiastically on Tuesday. Mumbai's benchmark Nifty index rose nearly five percent at the opening bell. The deal ends months of uncertainty that had unsettled investors and led to over $20 billion in foreign fund outflows from Indian markets last year, also pressuring the rupee.

Economic Implications

The US imposed sweeping tariffs in April last year, but most governments reached agreements with Washington, leaving India without a pact until now. Labour-intensive sectors like marine products, gems, and jewellery suffered, with exemptions only for smartphones and generic drugs. For instance, seafood exports to the US dropped 15 percent year-on-year from April to November due to a 50 percent tariff, according to G. Pawan Kumar of the Seafood Exporters Association of India.

The US-India trade deal could revive these areas. "We are confident that with the conclusion of the trade deal and lowering of tariffs to 18 percent, the quantum of export of seafood from India to USA will show an increase and soon reach back to the previous levels," Kumar said in a statement. Next steps remain unclear, including timelines for India's purchases and potential US access to Indian agriculture, which has been a sticking point in negotiations.

Analyst Responses and Cautions

The Federation of Indian Export Organisations welcomed the US-India trade deal as the "father of all deals." Director general Ajay Sahai told AFP: "It is extremely good news. Indian exporters will now be equally competitive compared to Southeast Asian and South Asian rivals." He noted immediate relief for apparel and footwear makers, with delayed orders likely to resume.

Analysts expressed caution over the lack of details. Economist Biswajit Dhar told AFP the bigger picture is unclear, especially regarding agriculture, despite India's prior resistance to opening that sector. Ajay Srivastava of the Global Trade Research Initiative described the $500 billion purchase figure as an aspiration rather than a firm commitment, urging a joint statement for clarity. No immediate response came from Indian officials on these points.