Why India may ‘gravitate back’ to US bloc after tariff deal with two-way trade set to rise
Analysts doubt that India can buy more than US$500 billion of US products in a short span of time and stop buying Russian oil
A trade deal reached between India and the United States could lead to closer geopolitical alignment between the two countries and bring New Delhi a step closer to becoming a leading manufacturing hub.
But observers are sceptical that New Delhi may stop buying Russian crude oil, and whether the volume of American exports to India may surge in a short span of time.
On Monday, US President Donald Trump said he would reduce the US tariff on Indian imports to 18 per cent from 25 per cent and remove an additional tariff of 25 per cent imposed on India for its purchases of discounted Russian oil, or an overall reduction from 50 per cent.
Delhi would reduce its tariffs and non-tariff barriers on US goods to “zero” and commit to buy more than US$500 billion of American energy, technology, agricultural products, coal and many other products, according to Trump.
Indian Prime Minister Narendra Modi confirmed the tariff deal in a social media post, saying: “Delighted that Made in India products will now have a reduced tariff of 18 per cent. When two large economies and the world’s largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation.”
Shilan Shah, deputy chief emerging markets economist at UK-based Capital Economics, said the deal between Trump and Modi could lead to India aligning closer to the US.