Six Key Questions That Still Cloud the US–India Trade Agreement

A long-awaited trade understanding between India and the United States was formally confirmed after a recent telephonic conversation between Prime Minister Narendra Modi and US President Donald Trump. Both leaders indicated that the agreement would lead to a significant reduction in tariffs, a move that has been welcomed by exporters and markets on both sides. However, beyond the broad announcements, many aspects of the deal remain unclear, leaving policymakers, businesses and analysts searching for answers.

According to statements issued after the conversation, the United States will lower its reciprocal tariffs on Indian goods from 25% to 18%. In addition, a separate 25% punitive duty imposed earlier—linked to India’s purchase of Russian crude oil—is expected to be withdrawn. If implemented as outlined, the effective tariff burden on Indian exports to the US would fall sharply, potentially improving India’s competitiveness compared to several other exporting nations.

While the tariff relief has been described as a positive development, the absence of detailed disclosures has raised several unresolved questions. These uncertainties could shape the future direction of bilateral trade and strategic cooperation.

Question One: Has India Committed to Ending Russian Oil Imports?

One of the most sensitive issues concerns India’s energy sourcing. President Trump has publicly suggested that India has agreed to stop purchasing crude oil from Russia. However, the Indian side has not made any explicit reference to such a commitment. At present, Russian oil accounts for more than 30% of India’s crude imports, translating to roughly 1.5 million barrels per day.

It remains unclear whether India has agreed to a complete halt, a gradual reduction, or merely a diversification of suppliers. There is also uncertainty over whether the removal of the punitive tariff was directly tied to assurances on oil imports.

Question Two: Can US and Venezuelan Oil Replace Russian Supplies?

Closely linked to the first issue is the question of alternative energy sources. The US currently supplies a relatively small share of India’s crude requirements, while Venezuela is only beginning to rebuild its export capacity. Analysts note that replacing Russian volumes in the short or medium term would be challenging.

Moreover, Venezuelan crude is heavier in composition, and not all Indian refineries are equipped to process it efficiently. Any meaningful shift in India’s oil import basket would likely require time, infrastructure adjustments and commercial negotiations.

Question Three: Has India Agreed to Zero-Duty Access for US Goods?

Another claim made by the US side is that India will allow duty-free entry for American products and remove non-tariff barriers. Such a move would represent a significant departure from India’s existing trade policy framework.

So far, there has been no official clarification on whether this applies across all sectors or only to selected categories. Without details on timelines, product lists or safeguards, it is difficult to assess the real impact of this provision.

Question Four: Is India Opening Its Agricultural Market?

Agriculture remains one of the most politically and economically sensitive sectors in India. Statements from US officials suggest that American farm products will gain greater access to the Indian market. However, New Delhi has traditionally treated agriculture as a red line in trade negotiations, given that a large section of the population depends on farming for livelihood.

There are also regulatory concerns, as much of US agricultural output involves genetically modified crops, which face strict scrutiny and restrictions in India. Whether the agreement includes limited access, pilot arrangements, or broader concessions is still unknown.

Question Five: Do Tariff Cuts Cover National Security Levies?

In recent years, the US has imposed additional duties under national security provisions on products such as steel, aluminium, automobiles and auto components. These duties are separate from reciprocal tariffs.

The latest announcements do not clarify whether the reduction to 18% includes these sector-specific levies or if they remain in force. This distinction is crucial for Indian manufacturers in metals and automotive supply chains.

Question Six: Is the $500 Billion Purchase Target Realistic?

President Trump has stated that India will purchase goods worth $500 billion from the US, spanning sectors such as energy, defence and agriculture. However, no timeframe has been specified. For context, India’s total imports from the US were significantly lower in the most recent reported year.

Reaching such a figure would require a substantial and sustained expansion of bilateral trade, along with policy alignment and long-term contracts.

The Road Ahead

The US–India trade agreement marks a potentially important step in economic engagement, but its true significance will depend on how these unanswered questions are resolved. Until formal documents are released and sector-wise details emerge, the deal remains more a framework than a fully defined roadmap.

For businesses and investors, clarity will be essential. For policymakers, balancing strategic interests with domestic priorities will continue to be a delicate task as negotiations move from announcement to implementation.