India has officially presented its final proposal to the United States in the ongoing trade negotiations, seeking a major tariff reduction from 50% to 15% and the complete removal of the 25% penalty on crude oil imports from Russia. Officials hope that these final discussions will yield a clear breakthrough early in the new year, potentially reshaping India’s trade dynamics with the US.
India’s Push for a Balanced Trade Framework
The two nations are currently negotiating a comprehensive bilateral trade agreement (BTA) to address long-pending tariff issues and create a balanced trade environment.
Commerce Secretary Rajesh Agarwal confirmed that discussions are “progressing positively,” adding that both sides have agreed on key frameworks, though the final timeline remains undisclosed. "We are optimistic about an agreement that supports fair trade and mutual growth," Agarwal noted.
The trade teams from both countries met in New Delhi this week, focusing on two primary issues: establishing a long-term trade agreement and reducing or eliminating the existing 50% tariff imposed by the US.
The Tariff Breakdown and Penalty Controversy
Currently, the United States imposes a 50% total tariff on Indian exports—with 25% as a reciprocal measure and another 25% linked to India’s continued purchase of Russian crude. According to the US administration, these oil imports indirectly support Moscow’s military actions in Ukraine.
India, however, maintains that its oil purchases are part of legitimate trade and energy diversification efforts, labeling the penalty as “unjustified” and urging immediate removal.
Decline in Russian Oil Imports
Recent data supports India’s case for leniency. Industry reports, including Reuters data, highlight a decline in India’s Russian oil imports—from around 1.77 million barrels per day in November to roughly 1.2 million barrels per day in December 2025.
Officials suggest the figure may drop below 1 million barrels per day in January 2026 due to stricter US sanctions on Russian energy giants Rosneft and Lukoil.
Seeking Equal Treatment as the EU
India’s proposal requests tariff relief in line with the European Union, which enjoys significantly lower duties. By contrast, the US recently reduced tariffs for Indonesia from 32% to 19%, prompting Indian negotiators to push for similar treatment.
“Indian exporters face a competitive disadvantage if tariffs remain higher,” a senior commerce official said. “We are asking for fair and equal access, not special treatment.”
Waiting for the US Decision
Although the framework discussions concluded around Diwali 2025, a formal announcement from the US—most likely from President Donald Trump—is still pending. Sources suggest the White House has yet to finalize its policy stance.
As the year ends, optimism persists in India’s trade circles that early 2026 may bring resolution, paving the way for stronger India-US trade cooperation and easing pressure on Indian exporters affected by high tariffs.
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