India and the United States are close to finalising a long-anticipated trade agreement that could reduce tariffs on Indian exports from 50% to around 15–16%, according to a Mint report. The deal, likely to be announced during the ASEAN Summit later this month, aims to resolve recent strains over trade, energy, and Russia-related sanctions.
Energy and Agriculture at the Core
Talks focus on energy and agricultural cooperation. India may agree to gradually cut imports of Russian oil in exchange for tariff concessions on its exports to the US. Russian crude currently accounts for about 34% of India’s oil imports, while the US supplies roughly 10% of its oil and gas needs.
On the agricultural side, India is considering expanding the import quota for non-genetically modified (GM) corn and soymeal from the US. The current quota of 0.5 million tonnes may be increased to support domestic demand in the poultry feed, dairy, and ethanol industries, though the import duty will remain at 15%. India may also allow imports of non-GM soymeal for both human and livestock consumption.
However, there is still no final clarity on tariff reductions for dairy products, including high-end cheese, a long-standing demand from the US side.
Geopolitical and Market Shifts
China’s reduced appetite for US corn has added momentum to the talks. Beijing’s corn imports fell from $5.2 billion in 2022 to $331 million in 2024, while overall US corn exports declined from $18.57 billion to $13.7 billion. The US is now seeking new export markets, with India emerging as a key opportunity.
On the energy front, India is also weighing the option of allowing US ethanol imports and may quietly instruct state-run oil marketing companies to diversify crude sourcing toward the US. Officials say President Donald Trump views India’s gradual reduction of Russian oil imports as a precondition for the deal.
A Bloomberg report dated 8 October 2025 noted that the price gap between Russian and benchmark crude has narrowed sharply from over $23 per barrel in 2023 to about $2–2.50—making US and Middle Eastern oil more competitive. As a result, India saved approximately $3.8 billion in FY25 as discounts on Russian crude diminished.