Prime Minister Narendra Modi and US President Donald Trump have officially confirmed the much awaited India-US trade deal, immediately reducing American tariffs on Indian goods from 25% to 18%. The deal has been hailed by both leaders as a turning point for the world's two largest democracies.

"Wonderful announcement" for 1.4 billion people

US President Donald Trump first made the announcement on his social media platform Truth Social. It was corroborated by Prime Minister Modi who confirmed the breakthrough following a high-level call with President Trump. "Wonderful to speak with my dear friend President Trump today," the Prime Minister stated. "Delighted that Made in India products will now have a reduced tariff of 18%. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement."

The Prime Minister stressed that the partnership would benefit both nations and unlock "immense opportunities for mutually beneficial cooperation," while also noting that India fully supports President Trump's efforts toward global peace and stability.

President Trump on Truth Social said that India agreed to stop buying Russian oil, and that the country would "buy American" products at unprecedented levels. President Trump said that the deal includes over $500 billion in commitments for US energy, technology, agricultural products, and coal. "He agreed to stop buying Russian oil, and to buy much more from the United States and, potentially, Venezuela," Trump posted, linking the move to efforts to end the conflict in Ukraine by cutting off Russian revenue.

“Out of friendship and respect for Prime Minister Modi and, as per his request, effective immediately, we agreed to a trade deal between the United States and India,” Trump said.

India has been a major buyer of discounted Russian crude since the start of the Ukraine conflict.

"India-US trade deal has gone through ups and downs like a roller coaster. While devil is in the details, it removes a hanging sword over rupee, equity and rates market. Let us hope that it is a win win deal for both the countries as they have lot to gain through cooperation," said Nilesh Shah, MD, Kotak Mahindra AMC.

Trump also claimed that India would move to eliminate tariffs and non-tariff barriers on American goods entirely. “They will likewise move forward to reduce their tariffs and non tariff barriers against the United States, to zero,” he wrote. Fortune India has approached the Ministry of Commerce and Industry for comments regarding Trump's claims of eliminating tariffs on American goods entirely, however, the queries have remained unanswered until the time of publication.

Even as President Trump said that the reciprocal tariff on India has been slashed from 25% to 18%, a Reuters report quoted a White House official who said that Washington is rescinding the 25% punitive tariff on all imports from India. US ambassador to India Sergio Gor also told a TV channel that the final US tariffs on India would be set at 18%, with technicalities being worked out.