Union Commerce and Industry Minister Piyush Goyal at a press conference on the India-US trade deal in New Delhi on February 7. While the text of the interim agreement mentions India’s intention to purchase $500 billion worth of US goods over the next five years, there is no reciprocal commitment to increase US imports from India to a similar level. | Photo Credit: PTI
The “framework for an interim agreement on reciprocal and mutually beneficial trade,” announced through the joint US-India statement issued on February 6, raises serious concerns about India’s economic and geopolitical future. The Trump administration is blatantly imposing an unequal and unfair bilateral trade agreement on India. By agreeing to such terms, the Modi government is giving up India’s national interest.
Unequal trade deal
The very premise of the Interim Agreement, defined as “a common commitment to reciprocal and balanced trade based on mutual interests and concrete results”, runs counter to India’s economic interests. The current nominal GDP of the United States is seven times that of India and its per capita income is more than 30 times that of India. Why has the Indian government committed to achieving “reciprocal and balanced trade” with a much larger and richer economy?
According to the text of the agreement, India agreed to zero or reduced tariffs on “all US industrial products and a wide range of US food and agricultural products, including distillers dried grains (DDG), red sorghum for animal feed, nuts, fresh and processed fruits, soybean oil, wine and spirits, and additional products.” India has also agreed to remove non-tariff barriers (NTBs) on US exports of ICT goods, medical devices, food and agricultural products, etc. India’s intention to purchase energy products, aircraft and aircraft parts, precious metals, technology products and coking coal from the US over the next five years has also been incorporated into the text of the framework agreement.
Such massive trade concessions to the United States could completely transform the structure of India’s foreign trade. The United States has long been the largest market for exports of Indian goods, with Indian exports to the United States exceeding $86 billion in 2024-25, accounting for more than 19% of India’s total exports of $437 billion. While India’s trade deficit expanded to $283 billion in 2024-25, it had a trade surplus of more than $40 billion with the United States. In 2025-26 (April-December), India’s goods trade surplus against the United States stood at $26 billion, and imports from the United States crossed $39 billion.
It is noteworthy that while the text of the interim agreement mentions India’s intention to purchase $500 billion worth of US goods over the next five years, there is no reciprocal commitment to increase US imports from India to a similar level. This completely exposes the Modi government’s exaggerated claims of greater potential for Indian exports following the reduction of the US reciprocal tariff rate to 18%. Such an unfair bilateral trade deal will wipe out India’s current trade surplus vis-à-vis the United States and turn it into a deficit in the next five years, with an increase in U.S. imports to India. The domestic market share losses by Indian industrial producers and farmers will far outweigh the gains made by Indian exporters, if any.
Eroding economic sovereignty
The President of the United States also issued a separate Executive Order on February 6, along with the release of the joint statement between the United States and India, making it clear that the withdrawal of the additional 25% import tariff on Indian exports is conditional on India stopping imports of crude oil from Russia. The executive order states: “Specifically, India has committed to stop directly or indirectly importing oil from the Russian Federation, has stated that it will purchase American energy products from the United States, and has recently committed to establishing a framework with the United States to expand defense cooperation over the next 10 years.”
The order goes on to state that the US Secretaries of Commerce and Treasury will monitor India’s oil purchases, and that the US will reimpose the additional 25% import duty if India “resumes direct or indirect import of oil from the Russian Federation.”
Data from India’s Ministry of Commerce and Industry suggests that India’s crude oil imports from Russia increased from 50.85 million metric tonnes in 2022-23 to 83.02 MMT in 2023-24 and further to 87.54 MMT in 2024-25. The price per barrel of Russian crude oil had decreased from $79.41 to $66.49 between April 2022 and March 2025. The share of Russian Ural oil in India’s total crude oil imports increased from less than 2% in 2020-21 to more than 35% in 2024-25. The share of Russian crude oil has already started to fall in 2025-26, and is expected to fall below 20% by the end of the financial year.
The Modi government’s genuflection to Russian oil imports at a discount rate could possibly expand India’s current account deficit and further devalue the rupee, besides reversing the moderation in domestic retail inflation. The interim trade deal, seen in its entirety with the US President’s Executive Order on India’s imports of Russian oil, is a recipe for stealing India’s strategic autonomy and transforming its economy into a US dependency. Parliament must stop the Modi government from inflicting such irreparable self-harm.
Prasenjit Bose is an economist and Congress leader. The opinions expressed are personal.
Published – February 9, 2026 12:42 am IST