Big shift in India-US trade row? Tharoor says 25% US tariff now gone

New Delhi: Senior Congress leader Shashi Tharoor said that as of 10:30 am IST, the United States’ additional 25 per cent punitive tariff imposed on India over its purchases of Russian oil is no longer in effect. In a post on X, Tharoor added that the reduction of the remaining 25 per cent tariff to 18 per cent is still awaiting implementation.

His remarks came amid the announcement of a framework for an interim trade agreement between India and the United States aimed at reducing tariffs and expanding market access.

The joint statement, released after US President Donald Trump’s announcement last week, outlined plans to lower tariffs on Indian goods. Trump had said that tariffs would be reduced to 18 per cent from 25 per cent after Prime Minister Narendra Modi agreed to stop buying Russian oil. The US president also signed an executive order revoking a separate 25 per cent tariff imposed last year.

The two countries described the framework as “reciprocal and mutually beneficial” and said they are committed to working towards a broader trade deal that would include additional market access commitments and more resilient supply chains. Further negotiations are required to formalise the interim agreement.

Under the framework, India would eliminate or reduce tariffs on US industrial goods and a wide range of American food and agricultural products. Trump had also said India would begin reducing import taxes on US goods and purchase USD 500 billion worth of American products over five years.

Prime Minister Modi thanked Trump for his “personal commitment to robust ties” and said the framework reflects the growing depth and trust in bilateral relations. He stated that the agreement would deepen investment and technology partnerships and strengthen economic cooperation.

However, opposition parties, including the Congress, have criticised the deal, alleging that it favours Washington and could adversely affect sensitive sectors such as agriculture and dairy. India had previously resisted tariff concessions in these sectors, citing their importance to employment.

Trade Minister Piyush Goyal defended the agreement, saying it protects sensitive agricultural and dairy products including maize, wheat, rice, ethanol, tobacco and certain vegetables. He said the deal would open a USD 30 trillion market for Indian exporters and help generate employment.

Goyal added that tariffs would be reduced to zero on several Indian exports to the US, including generic pharmaceuticals, gems and diamonds, and aircraft parts, enhancing India’s export competitiveness.

The interim pact comes as India advances other trade agreements, including a recently concluded free trade agreement with the European Union and a comprehensive economic partnership agreement with Oman, as well as finalised talks on a free trade deal with New Zealand.