India and the United States have formally agreed to a trade deal, resolving months of tense negotiations marked by disagreements over tariffs and market access. The agreement, announced on Monday, will see the U.S. reduce tariffs on Indian goods from 50% to 18%. In return, India has committed to increasing its imports from the U.S. and diversifying its sources of oil.

A key aspect of the deal addresses concerns surrounding the Indian agricultural sector. Government sources have affirmed that the interests of Indian farmers will be protected, with sensitive sectors like agriculture and dairy continuing to be shielded. This reassurance comes in response to speculation about the opening of the agriculture sector to American products.

"There has been no compromise on the interests of farmers," a government source stated. This commitment addresses concerns raised about the potential impact of the deal on the livelihoods of Indian farmers.

The agreement also stipulates changes in India's oil procurement strategy. While committing to increase overall imports from the U.S., India will also shift away from purchasing oil from nations facing international sanctions, such as Russia. Instead, India will focus on buying crude oil from countries where there are no sanctions, based on market rates. Sources have indicated that this could include countries like Venezuela, now that sanctions against it have been lifted.

President Trump highlighted India's commitment to "BUY AMERICAN," emphasizing a substantial increase in the purchase of U.S. energy, technology, agricultural products, and coal, potentially exceeding $500 billion.

Indian Trade Minister Piyush Goyal hailed the deal as one that would bring the U.S. and Indian economies closer. “This agreement unlocks unprecedented opportunities for farmers, MSMEs, entrepreneurs, and skilled workers to Make in India for the world, Design in India for the world, and Innovate in India for the world. ‍It will help India get technology from the U.S.,” Goyal said in a post on X.

Prime Minister Modi also expressed his satisfaction with the agreement, acknowledging the closer cooperation between the two countries. "Delighted that Made in India products will now have a reduced tariff of 18%,” Modi said in a post on X thanking Mr. Trump. He added, “When two large economies and the world's largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation."

The agreement follows a period of strained trade relations between India and the U.S., marked by escalating tariffs and disputes over energy sourcing. In mid-2025, the U.S. had raised tariffs on Indian goods to 50%, a move linked to India's continued purchase of Russian crude oil. This new deal signifies a shift towards improved trade relations and renewed cooperation between the two nations.

The India-U.S. trade deal comes shortly after India concluded a trade agreement with the European Union, which is expected to eliminate or reduce tariffs on a significant percentage of traded goods.