India and US Finalize Trade Deal, Safeguarding Sensitive Sectors

Union Commerce Minister Piyush Goyal has announced a significant trade agreement between India and the United States, aimed at protecting sensitive sectors such as agriculture and dairy. The deal, which includes a reduction of tariffs on Indian goods to 18%, is expected to create new opportunities for skilled workers and small enterprises in the US market. However, opposition parties have raised concerns about the potential impact on farmers' interests. As both nations finalize the technical aspects of the agreement, the implications for trade relations and economic growth are being closely monitored.

By Narendra Chaudhary Feb 4, 2026, 15:42 IST

Trade Agreement Details

On Wednesday, Union Commerce Minister Piyush Goyal informed Parliament that the trade agreement between India and the United States will ensure the protection of sensitive sectors, particularly agriculture and dairy.

He noted that the US has also taken steps to safeguard its own sensitive sectors.

Goyal highlighted that after numerous discussions over the past year, negotiators have successfully finalized several key components of the bilateral trade agreement.

He emphasized that tariffs on Indian exports to the US will be reduced to 18%, a significant drop from the previous combined rate of 50%, which included a 25% punitive tariff imposed in August for purchasing Russian oil.

According to Goyal, the new tariff rate for Indian goods is now more favorable compared to those imposed on several competing nations.

The commerce minister stated that this agreement aligns with the Union government's initiatives such as Viksit Bharat, Make in India, Innovate in India, and Design in India, contributing to the country's self-reliance.

Additionally, he mentioned that the deal will create opportunities for skilled Indian workers and micro, small, and medium enterprises in the US market.

Goyal reiterated that both New Delhi and Washington are finalizing the technical aspects of the agreement, which will be announced shortly.

Statements from US Officials

President Donald Trump announced on Monday that India and the US have reached an agreement on a trade deal, reducing tariffs to 18% effective immediately. This announcement followed a conversation between Trump and Prime Minister Narendra Modi.

Goyal's remarks came shortly after White House Press Secretary Karoline Leavitt stated that Modi had committed to purchasing $500 billion worth of US energy, transportation, and agricultural products.

Leavitt also claimed that India has agreed to cease buying Russian oil and increase its purchases of American oil as part of the trade agreement.

The US has consistently accused India of contributing to the war in Ukraine through its purchases of Russian oil, while India maintains that its oil imports are essential for energy security.

US Trade Representative Jamieson Greer mentioned that Washington will maintain an 18% tariff against India due to the significant trade deficit.

However, he noted that India has agreed to lower tariffs on various agricultural products, manufactured goods, chemicals, and medical devices.

India has yet to respond to the claims made by US officials.

Concerns from Opposition Parties

Opposition parties in India have raised alarms regarding the potential risks to farmers' interests in the trade deal.

Opposition leader Rahul Gandhi accused Prime Minister Modi of being compromised, alleging that he has betrayed the farmers of India by succumbing to US pressure to finalize the trade agreement.

On Tuesday, Goyal reassured that the interests of Indian farmers were prioritized and protected throughout the negotiations.