The India-US agreement raises hopes for a recovery, but the exact print is still unclear

The US and India announced a trade deal on Monday after months of negotiations, raising hopes for a strategic recovery after ties plunged to their lowest levels in decades.

But the lack of details and a clear timeline have raised doubts about how quickly the framework can become a binding agreement and whether the two countries can shake off last year’s tensions.

President Donald Trump US to cut reciprocal tariffs on India from 25% to 18% after PM Narendra Modi agreed to stop buying Russian oil. And so would Washington will cancel An additional 25% tariff has been imposed on New Delhi’s oil purchases.

India, in turn, will reduce tariffs and non-tariff barriers to US goods to zero, while pledging to buy $500 billion worth of US products, Trump said, without providing further details on a timeline or sector commitments.

Modi confirmed the new tariff rate of 18% Post on XThe agreement was called a step to restore stability and momentum in bilateral relations.

“I look forward to working closely (with President Trump) to take our partnership to unprecedented heights,” Modi said. But the Indian leader did not mention Russian oil or whether Trump’s Indian tariffs on American goods would be lifted.

Relations between the longtime partners quickly soured during Trump’s second term after he claimed in May to broker an end to India’s conflict with Pakistan, a characterization New Delhi has rejected. Tensions deepened after Washington imposed additional tariffs on India’s purchases of Russian oil Pity Chinathe largest importer of Russian energy.

“(It’s) in the details,” said Evan Feigenbaum, vice president for research at the Carnegie Endowment.

Feigenbaum was also skeptical of India’s ambition to meet the $500 billion target, calling it “just a stretch”. But U.S.-India trade is “perpetually below its potential, so ambition is good,” Feigenbaum said.

The US remained India’s largest trading partner and a key partner in defence, technology and advanced manufacturing.

In 2024, the total trade in goods and services between the two countries will increase by more than 8 percent and will amount to 212.3 billion dollars. Official US data showed. US merchandise exports to India will grow 3% to $41.5 billion in 2024, while services exports will grow 16% to $41.8 billion in 2024.

The trade deal will provide a major relief to India, which faces the highest US tariff rates among major economies.

The new 18% rate would be slightly more favorable to Pakistan, which faces a 19% tariff, as well as 20% duties to major regional manufacturing rivals Vietnam and Bangladesh.

“This trade deal is exactly what the doctor ordered: a confidence-building measure to help both sides address a variety of issues, including the trust that the Trump administration has eroded in New Delhi in recent months,” said Mark Linscott, senior fellow on India at the Atlantic Council and a former US trade official.

Most of Trump’s deals with trading partners remain frameworks with few details and uncertain timelines. Legal questions also remain about whether the president has the authority to finalize binding trade deals without congressional approval.

“I hope to see this deal go through. But beyond that, the two sides need to move on to the next round of negotiations and address a broader set of issues,” Linscott said, particularly in areas such as economic security, technical barriers to trade, digital trade and intellectual property rights.

The timing of the US-India deal comes a week after New Delhi finalized a sweeping free trade deal with the European Union, analysts said. extra urgent Negotiations with Washington.

Arpit Chaturvedi, South Asia consultant at Teneo, said that while the EU deal eased pressure on New Delhi by offering an alternative Western economic foothold amid volatile global tariffs, the US deal “carries great strategic weight”.

“Therefore, stabilizing trade ties with Washington goes beyond tariff arithmetic and strengthens India’s position in Western supply chains and strategic calculations,” Chaturvedi said, calling the deal a renaissance of India-US strategic ties.

Although both countries hailed the trade agreement as an important milestone, experts say it is unlikely to completely remove the strategic mistrust that has developed over the past year.

“Let’s not talk about the last six months as if they never happened or as if they somehow went ‘poof’ in a magical breath of fairy dust and smoke,” Feigenbaum said.

Repairing the US-India relationship may take more effort than it took to resolve it. Modi at a time when relations with the Trump administration have soured He sought to deepen relations with China and Russia at the summit in Beijing last year.

India’s ties to Russia are likely to remain a sticking point for Trump as New Delhi tries to strike a diplomatic balance to maintain stable relations with Moscow without angering Trump.

“Even as it changes its oil import structure away from Russia, India still wants to keep the relationship stable,” said Farwa Aamer, director of South Asia Initiatives at the Asia Society.

of India at the end of last year signed by state oil refiners New Delhi’s first long-term agreement with the US is to import 2.2 million tonnes of liquefied petroleum gas in 2026 as part of New Delhi’s bid to strike a trade deal with Washington. There are also private refiners in India reported in January reduced the purchase of Russian oil.

Modi said without mentioning Russia Post on X “President Trump’s leadership is critical to global peace, stability and prosperity. India fully supports his peace efforts.”

“A lot needs to be done to insulate the relationship and ensure it is stable enough to withstand future challenges,” said Basant Sanghera, managing director of The Asia Group. He said that the two sides still need to work out a legally binding text, noting that the tariff reduction is only the first stage of a bilateral agreement.