India and the US clinched the long-awaited bilateral trade agreement (BTA) on Monday, sparking jubilation as US President Donald Trump reduced reciprocal tariffs on India-made products from the current 25 per cent to 18 per cent after a phone call with Prime Minister Narendra Modi.
India, in return, will move forward to reduce “tariffs and non-tariff barriers” against the US to zero, said Trump, adding that New Delhi would buy American goods, including energy, worth more than USD 500 billion.
External Affairs Minister, S Jaishankar, who is currently in the US for a ministerial meeting on critical minerals supply chain, said on Tuesday he “welcomes the announcements on bilateral trade” and that the deal will spur ‘Make in India’ endeavours.
In a post on X, Jaishankar said the deal with undoubtedly generate employment and promote innovation to strengthen both economies.
“This will create more jobs, spur growth and promote innovation in both economies. It will strengthen ‘Make in India’ endeavors and encourage trusted technology ties.”
“The opportunities in our economic engagement are truly vast and we are confident of realizing them. A robust economic relationship is the strongest foundation for our strategic partnership,” the external affairs minister wrote.
Following the trade deal announcement, PM Modi thanked Trump and said he was delighted that “Made-in-India products will now have a reduced tariff of 18 per cent”.
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“Wonderful to speak with my dear friend President Trump today. Delighted that Made-in-India products will now have a reduced tariff of 18 per cent. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement,” Modi said.
Trump’s leadership, said PM Modi, is “vital for global peace, stability and prosperity”, and that India “fully supports his efforts for peace”.
When two large economies and the world’s largest democracies work together, added the prime minister, it benefits the people and “unlocks immense opportunities for mutually beneficial cooperation”.
Trump had declared the trade deal’s finalisation on his social media handle late Monday, saying: “Out of friendship and respect for Prime Minister Modi and, as per his request, effective immediately, we agreed to a trade deal between the United States and India, whereby the United States will charge a reduced reciprocal tariff, lowering it from 25 per cent to 18 per cent.”
“Our amazing relationship with India will be even stronger going forward. Prime Minister Modi and I are two people that get things done something that cannot be said for most,” he said.
Trump said he also discussed ending the war between Russia and Ukraine with PM Modi, for which the latter agreed to stop buying Russian oil. “He agreed to stop buying Russian Oil, and to buy much more from the United States and, potentially, Venezuela,” the US president said.
“This will help end the war in Ukraine, which is taking place right now, with thousands of people dying each and every week,” Trump said.
Post the BTA conclusion, India now has lower tariff compared to competing export economies, officials said.
They cited 19 per cent American tariffs on Indonesia, 20 per cent on Vietnam, 20 per cent on Bangladesh and 34 per cent on China.
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