Finance Minister Nirmala Sitharaman said the U.S. decision to cut tariffs on Indian goods to 18% is expected to revive exports, alongside India’s efforts to diversify into new global markets.
Earlier 50% U.S. tariffs had hurt Indian exporters by raising costs, squeezing margins and reducing competitiveness, particularly in sectors like steel, aluminium, textiles, engineering goods and agriculture.
The tariff reduction comes as part of a broader agreement under which India will lower trade barriers and shift oil purchases away from Russia toward the U.S. and potentially Venezuela.
US-India Deal: Exports To Get Boost With Tariff Cut, Says FM Nirmala Sitharaman
Sectors such as steel, aluminium, textiles, engineering goods and some agricultural products were hit as higher duties led US buyers to shift orders to alternative suppliers.
Summary
US President Donald Trump's decision to slash tariffs on Indian goods to 18 per cent augurs well for the country as it will boost exports, Finance Minister Nirmala Sitharaman said Tuesday.
"So, actually our exports will pick up now, that is my expectation... along with having found new markets where they will continue to operate," she said in an interview to PTI Videos.
"It is a good augury for them (exporters)," Sitharaman said.
Trump's steep 50 per cent tariffs last year dented Indian exports by raising landed costs, squeezing exporter margins, and eroding competitiveness in the American market. Sectors such as steel, aluminium, textiles, engineering goods and some agricultural products were hit as higher duties led US buyers to shift orders to alternative suppliers.
On Monday, Trump agreed to slash US tariffs on Indian goods to 18 per cent from 50 per cent in exchange for India lowering trade barriers as well as stopping its purchases of Russian oil and instead buying oil from the US and potentially Venezuela.
On implementation, the deal would bring tariffs on India in line with most other Asian countries of around 15-19 per cent.
Sitharaman said while the details of the agreement will be announced soon, the cut in tariffs is a "good auguring" for exporters.
Taken together with the new markets exporters had tapped after becoming uncompetitive in the US, the "exports will pick up now," she said.
Earlier punitive US tariffs caused India's bilateral trade surplus with the US to shrink by USD 2.5 billion each month on average in September-December 2025 (versus the monthly average in January-August 2025), according to HSBC Global Investment Research.
There have also been USD 14 billion of equity outflows by foreign investors since July 2025 amid weak sentiment.
The new 18 per cent levy undercuts tariffs on key regional competitors such as Vietnam and Bangladesh, both facing duties of 20 per cent, restoring India's price advantage in the US market. The move offers significant relief to a broad range of labour-intensive exports, including apparel, footwear and jewellery makers, which had been hit by punitive 50 per cent tariffs imposed in August, sharply denting competitiveness and order flows.
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Earlier in the day, Sitharaman had in a post on X called the tariff reduction announcement "Good news for #MadeInIndia products. They will now face reduced tariff of 18%." Trump's announcement via a social media post late Monday night is part of a general agreement under which India has apparently agreed to stop buying Russian oil, reduce "their tariffs and non-tariff barriers against the United States to zero", and India buying an incremental USD 500 billion of "US energy, technology, agricultural, coal, and many other products" over the next five years.
The commitment to stop buying Russian oil nullifies the additional 25 per cent punitive tariff previously levied, and thereby reduces the effective applied tariff on Indian exports to the US to 18 per cent from 50 per cent.
- With inputs from PTI.
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