A new trade deal between the United States and India was announced late Monday, February 2, 2026, by U.S. President Donald Trump and Prime Minister Narendra Modi. Commerce Minister Piyush Goyal stated on Tuesday, February 3, 2026, that the agreement excludes sensitive agricultural items and dairy, with full details expected “soon.”
Key Provisions of the Deal
Under the terms of the agreement, the U.S. will reduce its 25% ‘reciprocal’ tariffs on India to 18%. Additionally, the U.S. will remove the 25% ‘penalty’ tariffs imposed on India due to its import of Russian oil. Mr. Goyal described the deal as “the best among India’s neighbours and its competitors.”
While Mr. Goyal highlighted the protections for India’s agriculture and dairy sectors, he did not detail specific concessions made by India. He also did not directly address claims made by Mr. Trump regarding India’s future purchases of U.S. goods, including energy, technology, and agricultural products.
Political Context and Announcement
The announcement of the deal was complicated by events in the Indian Parliament. According to Mr. Goyal, actions by the Opposition – specifically, Lok Sabha Leader Rahul Gandhi, the Congress party, the DMK, the Trinamool Congress, and the SP – forced him to convey the information via a press conference rather than on the floor of the House.
Mr. Goyal explained that the initial announcement regarding the tariff reduction came from the U.S. because the U.S. had set the original tariffs and was therefore responsible for announcing their reduction.
Looking Ahead
The deal is currently in the “final stages of detailing” between the negotiating teams of both countries. Once the final agreement is inked and technical processes are completed, a joint statement with full details is expected. It is possible that further negotiations will refine the terms of the agreement before its official implementation. Analysts expect the deal could lead to increased trade in labor-intensive sectors like textiles, apparel, and gems and jewellery.
Frequently Asked Questions
What sectors are excluded from the trade deal?
According to Commerce Minister Piyush Goyal, sensitive agricultural items and dairy have been excluded from the trade deal.
What tariff reductions were agreed upon?
The U.S. has agreed to lower its 25% ‘reciprocal’ tariffs on India to 18% and entirely remove the additional 25% ‘penalty’ tariffs imposed on India for its import of Russian oil.
What is the reported value of potential future purchases from the U.S.?
According to sources in the Indian Government, the deal includes an “intent to import” over $500 billion worth of U.S. products over five years, including equipment for data centres, technology for civil nuclear cooperation, and advanced AI chips.
How might this trade deal reshape the economic relationship between the U.S. and India in the coming years?
