India and US Close to Finalising Trade Deal Focused on Energy and Agriculture

India and the United States appear to be on the verge of finalising a long-awaited trade agreement that could reshape bilateral trade ties. According to reports, the proposed deal would reduce American tariffs on Indian imports to around 15 to 16 per cent, significantly lower than the current 50 per cent rate. The agreement, largely centred around energy and agriculture, may also prompt India to gradually scale back its purchases of Russian crude oil.

Trade Talks and Economic Focus

The trade negotiations between the two countries have been ongoing for years, but recent high-level discussions between US President Donald Trump and Indian Prime Minister Narendra Modi have accelerated progress. Both leaders reportedly discussed trade, energy, and bilateral cooperation during their latest conversation. Trump confirmed that energy was a key focus, with Modi assuring that India would take steps to limit its purchases of Russian oil as part of the broader deal.

The Role of Energy in the Agreement

Energy remains a crucial part of the trade discussions. Currently, Russia accounts for about 34 per cent of India’s crude oil imports, while the United States contributes roughly 10 per cent of India’s total oil and gas needs. The proposed deal could see India diversify its crude sourcing and increase energy trade with the US. Washington, in return, is expected to ease some trade restrictions and offer concessions on energy-related tariffs.

The Shift Away from Russian Oil

One of the central conditions of the trade deal, as reported, is India’s gradual reduction in imports of Russian crude. Trump has emphasised that India’s cooperation in limiting Russian energy purchases is essential for finalising the agreement. While Indian officials have reportedly conveyed this to Moscow, the process will likely be gradual, as Russia still offers competitive discounts on oil that benefit India’s economy.

Agricultural Cooperation and Market Access

Beyond energy, agriculture forms the other major pillar of the India-US trade discussions. India is expected to open its markets further to non-genetically modified (non-GM) American corn and soymeal. These imports would support India’s growing domestic demand for poultry feed, dairy, and ethanol production. In exchange, New Delhi is pushing for a clause that allows periodic reviews of tariffs and market access to maintain flexibility in future negotiations.

Tariff Adjustments and Key Proposals

The proposed agreement would see American tariffs on Indian imports lowered significantly, potentially boosting exports from India. At the same time, India is considering maintaining a 15 per cent duty on non-GM maize while raising import quotas from the current limit of 0.5 million tonnes annually. Talks are also progressing on permitting imports of non-GM soymeal for both human and livestock use, though clarity on tariff reductions for dairy products remains pending.

Diplomatic and Economic Balancing Act

India’s position remains one of careful balance. While it seeks to strengthen trade ties with the US, it must also manage its long-standing energy relationship with Russia. New Delhi has repeatedly stated that its oil imports from Russia are based on economic practicality and energy security considerations. Any reduction in Russian oil imports would therefore be gradual, aligning with both strategic and market realities.

Possible Announcement at the ASEAN Summit

Reports suggest that the official announcement of the trade deal could take place during the upcoming ASEAN Summit, where Modi and Trump are expected to meet. The final agreement could mark a new phase of India-US economic partnership, combining energy cooperation, agricultural trade, and tariff reforms to promote greater stability and growth.

Future Outlook

If finalised, this trade deal could set a new precedent for India-US relations by addressing long-standing trade imbalances and expanding access in critical sectors. While challenges remain, particularly around energy diversification and agricultural standards, both nations seem committed to achieving a mutually beneficial outcome.