US President Donald Trump’s decision to reduce tariffs on Indian goods from 50% to 18% bodes well for the country as it will boost exports, Finance Minister Nirmala Sitharaman said on Tuesday.
“So our exports will pick up now, that’s my expectation… along with finding new markets where they will continue to operate,” she said in an interview to news agency PTI.
“It bodes well for them (exporters),” Sitharaman added as Trump said on Monday that he was cutting tariffs on India from 50% to 18% as part of a newly announced trade deal. He also claimed that the US was scrapping a separate 25% punitive duty attached to India’s purchases of Russian oil.
However, the tariff reduction comes with certain limitations. President Trump mentioned that the deal was made in exchange for India lowering trade barriers and stopping purchases of Russian oil and instead buying oil from the US and possibly Venezuela.
Good news for Indian exporters
A steep 50% tariff by the United States last year severely hurt Indian exports as it increased landing costs, squeezed export margins and eroded competitiveness in the US market.
Industries such as steel, aluminum, textiles, engineering goods and some agricultural products were hit particularly hard as higher tariffs led US buyers to shift orders to alternative suppliers.
If implemented, the trade deal will bring India’s tariffs in line with most other Asian countries’ tariffs, around 15-19%. Key regional competitors such as Vietnam and Bangladesh currently face a 20% tariff, so this development is expected to erode India’s price advantage in the US market.
Sitharaman said that while the details of the deal will be announced soon, the reduction in tariffs “bodes well” for exporters. Along with the new markets that exporters have tapped after becoming uncompetitive in the U.S., “exports will now pick up,” she said during an interview.
Impact of Previous Tariffs on India’s Trade
According to HSBC Global Investment Research, previously high US tariffs caused India’s bilateral trade surplus with the US to shrink by an average of $2.5 billion each month in September-December 2025 (compared to the monthly average for January-August 2025).
The agency’s report also said there has been an outflow of $14 billion in foreign investor stocks since July 2025.
Earlier in the day, FM Sitharaman posted about the development on X (formerly Twitter), calling the tariff cut announcement “good news for #MadeInIndia products”.
The move is meant to offer major relief to a wide range of labour-intensive exports, including clothing, footwear and jewelery makers, on which it slapped punitive 50% tariffs in August, sharply eroding competitiveness and order flows in the market as people looked for cheaper alternatives.