Trump to cut India tariffs as Modi agrees to stop buying Russia oil

Indian shares surged on Tuesday after US President Donald Trump announced a long-awaited trade deal that slashed tariffs on imports in exchange for Delhi’s agreement to stop buying Russian oil.

The deal, announced overnight, will see tariffs on Indian exports cut to to 18% from 50%, removing a punitive 25% duty that had been imposed on the so-called “reciprocal” rate along with a further reduction for lowering trade barriers.

Trump claimed his India counterpart Narendra Modi had "agreed to stop buying Russian oil, and buy much more from the United States, and potentially Venezuela". He added that India would also buy more than $500bn worth of US energy, technology, agricultural and other products.

Modi in response did not address Trump’s specific claims about the oil purchases but thanked the American leader "on behalf of the 1.4 billion people of India for this wonderful announcement".

India is heavily reliant on oil imports to meet its massive demand and has been buying cheaper crude from Moscow as most western nations cut economic ties with Russia after the unprovoked 2022 invasion of Ukraine.

Indian equities reacted positively to the news, with the Nifty 50 index up 2.55% and the Sensex by 2.54% with both having jumped more than 4% in early trade.

Last week, India and the EU announced what was described as "the mother of all trade deals", axing tariffs on 80-90% of goods. It the country’s ninth free trade agreement in four years.

Reporting by Frank Prenesti for Sharecast.com