Auto Inc Welcome India-US Trade Deal as Tariffs Reduced to 18%

Indian industry leaders have responded positively to the India-US trade deal announced on Monday following a conversation between Prime Minister Narendra Modi and US President Donald Trump. The agreement reduces US tariffs on Indian imports from 50% to 18%, marking a significant shift in bilateral trade relations.

The deal comes after months of tariff escalation that had seen US duties on Indian products reach some of the highest levels globally. According to President Trump's announcement on Truth Social, the US was rescinding a punitive 25% duty on all imports from India related to its purchases of Russian oil, which had been stacked on top of a 25% "reciprocal" tariff rate.

Dr. Anish Shah, Group CEO and Managing Director of the Mahindra Group, described the agreement as "a significant step forward in strengthening bilateral trade and investment ties." He emphasized that the immediate tariff reduction would boost growth momentum and improve business confidence. "With the Indian economy on a strong growth trajectory, this deal adds meaningful momentum to India's growth ambitions," Shah stated.

The deal's significance extends beyond immediate tariff relief, with both nations committing to progressive reductions in trade barriers. Industry observers note that the agreement could facilitate deeper economic integration between the two countries, potentially opening new opportunities for manufacturing and technology collaboration.

Sudarshan Venu, Chairman of TVS Motor Company, echoed similar sentiments, calling the tariff reduction "a positive step that improves export competitiveness and reinforces confidence in long-term bilateral economic ties." Venu highlighted the deal's alignment with the government's Viksit Bharat 2047 vision and noted that India has now secured several strategic trade deals with key economic partners worldwide.

Under the agreement, India has committed to halt purchases of Russian oil and buy energy from the US instead. Prime Minister Modi also pledged that India would "buy American at a much higher level," including more than $500 billion worth of US energy products such as coal, along with technology, agricultural, and other products, according to Trump's announcement.

Both leaders emphasized the commitment to progressively lower tariff and non-tariff barriers. Trump stated that India would "move forward to reduce their Tariffs and non-tariff barriers against the United States to ZERO."

PM Modi thanked President Trump on X (formerly Twitter), saying the decision would benefit both countries. "When two large economies and the world's largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation," he posted.

The announcement triggered positive reactions in financial markets, with US-listed shares of Indian companies including Infosys, Wipro, and HDFC Bank rising. India-focused funds also rallied on expectations of improved market access.

Industry leaders highlighted broader implications beyond immediate tariff relief. Venu pointed to the potential for deeper supply-chain integration, faster technology collaboration, and increased investment into advanced manufacturing. He noted that in a challenging global environment, predictability and openness in trade would help Indian industry scale, innovate, and create jobs.

However, key elements of the agreement remain unclear. Neither side has yet provided detailed documentation outlining timelines for tariff reductions, the scope of trade barrier eliminations, or specific commitments on energy purchases. The deal's implementation framework and compliance mechanisms have not been publicly disclosed.

The agreement represents a notable development in India-US economic relations, with both nations positioning it as mutually beneficial amid evolving global trade dynamics.