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India to increase spending on U.S. oil, arms, aircraft and partly open agricultural access

Published: 03 Feb. 2026, 19:22

The latest issue of The Indian Express newspaper, with the lead story covering U.S. tariffs on Indian imports being slashed to 18 percent, is displayed for sale in New Delhi on Feb. 3. [REUTERS/YONHAP]

India has agreed to buy petroleum, defense goods and aircraft from the United States while partly opening up its highly guarded agricultural sector under a trade deal, according to a government official, as the two sides reconcile after months of tensions.

U.S. President Donald Trump announced on Monday a trade deal with India that slashes U.S. tariffs on Indian goods to 18 percent from 50 percent in exchange for India halting Russian oil purchases and lowering trade barriers.

Trump said India agreed to buy more U.S. goods, including energy, coal, technology, agricultural and other products, with purchases rising to as much as $500 billion.

The Indian government official, who did not want to be named, said India has agreed to buy U.S. goods and offered market access for some agricultural products as part of New Delhi's commitments under the deal.

India recently offered select market access for agricultural products to the European Union under a trade deal.

A man reads the latest issue of The Times of India newspaper with a story on U.S. tariffs on Indian imports being slashed to 18 percent in New Delhi on Feb. 3. [REUTERS/YONHAP]

The South Asian nation has also lowered tariffs on imported cars to address Washington's immediate demands to conclude the first tranche of the deal, the official added.

India's trade ministry did not immediately reply to an email seeking comment.

India's exports to the United States rose 15.88 percent on year to $85.5 billion from January to November 2025, and imports stood at $46.08 billion, Indian government data showed.

“The commitment to buy U.S. products covers sectors including pharmaceuticals, telecom, defense, petroleum and aircraft. This will be done over the years,” the official told Reuters.

The official said a more comprehensive pact with the United States will be negotiated over the coming months.

Indian rupee and U.S. dollar currency notes are held by a foreign exchange employee at an office in New Delhi on Aug. 26, 2025. Indian exporters on Feb. 3 hailed a breakthrough trade deal with Washington after U.S. President Donald Trump slashed tariffs on Indian goods, ending months of tensions that had rattled markets and squeezed key sectors. [AFP/YONHAP]

The announcement of a trade deal between India and the United States has reduced a great deal of global uncertainty, Anuradha Thakur, India's economic affairs secretary, said at an event in New Delhi on Tuesday.

It also lifted investor sentiment. India's benchmark stock index, the Nifty 50, was up nearly 3 percent, and the rupee climbed over 1 percent to 90.40 per dollar in early trading.

The 18 percent tariff offered to India is lower than its Asian peers and comes just in time, as exporters are still negotiating annual contracts with their U.S. customers, the official said.

Cargo containers are seen stacked outside the container terminal of Jawaharlal Nehru Port Trust in Mumbai, India, July 15, 2015. [REUTERS/YONHAP]

Among Asian nations, U.S. tariffs on goods from Indonesia stand at 19 percent, and the rates for Vietnam and Bangladesh stand at 20 percent.

“Lower tariffs will not only improve price competitiveness but also help Indian exporters integrate more deeply into U.S. supply chains,” said S. C. Ralhan, the president of the Federation of Indian Export Organisations.

Reduction in U.S. tariffs on most Indian goods will reinvigorate India's goods exports to the United States, Moody's Ratings said in a statement on Tuesday.

Reuters