US President Donald Trump has announced a significant trade agreement with India, marking a pivotal moment in bilateral economic ties. Speaking from the White House, Trump described Prime Minister Narendra Modi as "one of my greatest friends" and a "powerful and respected leader."

This deal reduces the US reciprocal tariff on Indian goods from 25 per cent to 18 per cent, with India committing to eliminate its tariffs and non-tariff barriers against American products over time.

The announcement came after a morning phone call between the two leaders, which Trump characterised as highly productive. "It was an honour to speak with Prime Minister Modi of India this morning," Trump stated, emphasising their personal rapport. He noted that their discussions covered not only trade but also global issues, including efforts to end the ongoing war between Russia and Ukraine. He announced "We spoke about many things, including trade, and ending the war with Russia and Ukraine."

At the heart of the agreement lies a commitment to reciprocity and fairness in trade. Trump highlighted that the US would lower its tariff to 18 per cent, while India would progressively reduce its barriers to zero. This move addresses long-standing US concerns over India's high tariffs on goods like motorcycles, automobiles, and agricultural products, which have previously strained relations.

Trump expressed optimism about the future, declaring, "Our amazing relationship with India will be even stronger going forward." This reflects a broader thaw in US-India ties under his administration, building on previous collaborations in defence, technology, and strategic partnerships against shared threats in the Indo-Pacific region.

The leaders' mutual admiration shone through in Trump's remarks: "Prime Minister Modi and I are two people that get things done, something that cannot be said for most." This echoes their history of high-profile interactions, from joint military exercises to the 'Howdy Modi' event in Houston, underscoring a relationship rooted in pragmatism and results.

For India, the deal offers relief from escalating US tariffs imposed during Trump's first term, which targeted steel, aluminium, and digital services. By slashing the reciprocal rate, the US signals a willingness to revive market access for Indian exports like textiles, pharmaceuticals, and gems, potentially boosting bilateral trade volume beyond the current $190 billion annually.

Geopolitically, the timing is noteworthy. With discussions on the Russia-Ukraine conflict included, the pact positions India as a key mediator in Trump's peace initiatives. Modi's neutral stance on the war has drawn Western scrutiny, but this deal could enhance India's leverage in global forums while securing economic gains.

Business leaders in both nations have welcomed the development. American firms like Harley-Davidson and Apple, which faced Indian import duties, stand to benefit immensely. Indian exporters, meanwhile, anticipate smoother entry into the vast US market, fostering job creation and supply chain resilience amid global disruptions.

Critics, however, caution that details remain sparse. Questions linger over timelines for India's zero-tariff pledge, enforcement mechanisms, and exemptions for sensitive sectors like dairy and agriculture. Labour unions in the US worry about job competition, while Indian farmers fear exposure to subsidised American produce.

This agreement fits into Trump's 'America First' agenda, prioritising bilateral deals over multilateral frameworks like the WTO. It sidesteps the stalled US-India mini-trade pact from 2024, opting instead for targeted tariff relief to deliver quick wins for voters.

Looking ahead, the deal could pave the way for deeper integration. Enhanced defence co-production under initiatives like iCET, coupled with trade liberalisation, might accelerate India's role as a counterweight to China. Trump and Modi have previously championed such alignments, from QUAD summits to semiconductor partnerships.

In New Delhi, official sources confirmed the call but refrained from immediate details, citing ongoing negotiations. Commerce Minister Piyush Goyal is expected to brief Parliament soon, where the opposition may probe the deal's implications for Make in India and self-reliance goals.

Ultimately, this tariff pact symbolises a strategic embrace between two democracies navigating a multipolar world. As Trump put it, their ability to "get things done" could redefine US-India ties for years to come, blending economic pragmatism with geopolitical synergy.

Based On NDTV Report