Despite the new steps taken by both sides to enhance trade cooperation, questions about the content of the agreements signed and the complex nature of the relations between the two powers remain.
Trade barriers have been eliminated
After protracted negotiations between the parties to remove obstacles to strengthening trade and economic cooperation, Washington and New Delhi have reached a certain mutual understanding on a number of fundamental issues related to removing tariff barriers. Considering the goal set to increase bilateral trade relations (currently around $130 billion) to $500 billion by 2030 and New Delhi’s recent successful engagements with Brussels, Ottawa, and a number of its other important partners, the US and India are moving towards concluding a new trade deal for mutual tariff reductions under the patronage of US and Indian leaders.
The US president unexpectedly announced a significant reduction in tariffs against India, which he himself had previously raised. Under the new terms of the drafted agreement, the tariffs imposed by the US on Indian goods in August 2025 will be reduced from 50% to 18% – the lowest rate for a South Asian country. India, in response, also agreed to take reciprocal steps to substantially reduce tariffs on imported American goods.
However, Washington’s claim that New Delhi is ready to reduce tariffs to zero has not yet been confirmed. According to the US, India allegedly agreed to sharply reduce – and in the future completely cease – purchases of Russian oil. This was the main factor that prompted Trump to impose an additional 25% tariff on Indian exports in the summer of 2025, bringing the total rate to a record 50%. Indians at the time considered this measure unjustified and unfair and one of the highest tariffs imposed by Washington in trade with other countries.
Under the new agreements, India has agreed to increase purchases of oil, liquefied natural gas, other energy resources, defense and technology products, aviation equipment from the United States and to open access for American goods to the strictly regulated Indian agricultural market. The agreements also cover telecommunications equipment and pharmaceuticals. Both sides are presenting the deal concluded as a kind of first important stage, with the ultimate goal being the future achievement of a free trade agreement.
Significantly, the breakthrough in the trade deal was achieved during Indian Foreign Minister Subrahmanyam Jaishankar’s visit to the United States. He held negotiations with his US counterpart, Marco Rubio, and other administration officials. In addition to current foreign policy topics, discussions covered prospects for trade, economic investment, and defense cooperation, as well as rare earth minerals.
Thus, following a large-scale free trade agreement with the European Union, India is close to resolving trade issues with the United States. However, Trump’s fundamental demand for India to curtail its purchases of Russian oil remains off the table.
Will India stop buying Russian oil?
In his statement, the US President mentioned India’s alleged readiness to cease purchasing Russian oil and reorient towards other markets, including the US, Canada, and possibly Venezuela, not to mention imports from the Middle East. It is noteworthy, however, that during a phone call with Trump, the Indian Prime Minister, while welcoming the achievement of the trade agreements, made no mention of its alleged promise to scale back its ongoing large-volume purchases of Russian oil.
According to experts, it would be extremely disadvantageous for India to give up importing cheaper Russian oil. Over the past four years, India has gained nearly $13 billion in benefits from purchasing Russian oil at a favorable discount. During this period, approximately 17% (the second-highest share after China) of all Russian oil exports went to India, causing bilateral trade to soar from $12 billion to $65 billion.
According to some estimates, India’s annual purchases of Russian oil amounted to about 20 million tons, and since 2022, Russia has sold its partner over 70 million tons of oil in total at preferential prices. By 2025, Russia accounted for approximately 36% of India’s total oil import volume. Although, due to US sanctions against Rosneft and Lukoil, as well as new restrictive measures from the EU, India’s volume of Russian oil purchases reportedly declined from 1.8 million to 1.4 million barrels per day, Russia’s share among all oil suppliers to the country remains the highest. Local companies and refineries are reluctant to lose profits from the cheaper Russian market.
Thus, the unparalleled competitiveness of heavily discounted Russian oil may continue to be factored in by pragmatic Indians despite Western appeals, albeit with a certain reduction in such purchases to avoid conflict with the Americans. Furthermore, experts believe there are legal workarounds and various methods to circumvent sanction barriers, which the country’s entrepreneurs, uninterested in buying more expensive oil from other nations, including the US, are already skillfully employing.
Experienced Indians should be able to find a balance of interests to avoid damaging relations with their key strategic partners, namely Russia, the United States, and the European Union. In this context, New Delhi particularly counts on understanding from Moscow, its most reliable, time-tested, and specially privileged partner.
Anvar Azimov, Diplomat and political scientist, Ambassador Extraordinary and Plenipotentiary, Ph.D. in History, Senior Research Fellow at the Eurasian Educational Institute of MGIMO of the Ministry of Foreign Affairs of Russia
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