The United States President Donald Trump announced what he described as a “trade deal” with India to reduce market barriers between the two countries, which together have a combined gross domestic product of about $33 trillion.

Trump said on Monday, February 2, that the U.S. would reduce tariffs on Indian goods from a combined 50% to 18% after India agreed to stop purchasing Russian oil, which had been a major point of contention between the two sides.

Trump said the agreement was reached during a telephone call with Indian Prime Minister Narendra Modi. The White House officials said the reduction includes the removal of an additional 25% tariff imposed last year on Indian goods as punishment for India’s purchase of Russian oil.

Trump also claimed that India had agreed to eliminate tariffs and non-tariff barriers on the U.S. goods and to increase purchases of the U.S. products by more than $500 billion across sectors including energy, technology, agriculture and coal.

In a statement posted on X shortly after Trump’s announcement, Modi confirmed that Indian products would face a reduced U.S. tariff of 18% and thanked Trump for the announcement, but did not mention a trade deal, any agreement on Russian oil, or commitments to purchase U.S. goods. India has not publicly confirmed claims that it would buy oil from the U.S. or Venezuela.

India’s commerce minister, Piyush Goyal, said on Tuesday, February 3, that the two countries would sign a deal “shortly” and that a joint statement would be issued once final details were agreed. He did not provide further information. The subsequent statements from Trump and Modi differed significantly, according to economists and geopolitical observers.

The announcement comes at the end of the first year of Trump’s global trade war, during which India was among the most affected countries and bilateral relations had deteriorated. The U.S. is India’s largest trading partner, with bilateral trade worth $129.2 billion last year. India exported nearly $87 billion worth of goods to the U.S. in 2024, while the U.S. exports to India totaled about $41 billion.

Trump’s claim that India would purchase more than $500 billion in U.S. goods has not been confirmed by New Delhi. The figure would amount to roughly 85% of India’s total annual government spending outlined in its latest budget. The contents of the agreement, including its impact on agriculture, intellectual property laws, digital taxation, labour standards and environmental conditions, have not been made public.

The announcement has drawn mixed reactions in India. The senior government ministers praised the deal as historic, while opposition leaders demanded full disclosure of its terms. A number of analysts said uncertainty remains over whether a formal free trade agreement has been negotiated or concluded.