PVTIME – The US and India have announced a trade agreement under which Washington will reduce tariffs on Indian goods from 25% to 18%. India could also be exempted from the additional 25% tariff imposed on its purchases of Russian oil. In return, the US is seeking zero tariffs on its goods and a commitment from India to purchase US products worth $500 billion, although no specific industry details or timelines have been revealed.
Indian Prime Minister Narendra Modi confirmed the revised 18% tariff rate on X (formerly Twitter), describing the deal as a step towards stabilising bilateral relations. He made no reference to Russian oil or the US’s request for zero tariffs. Tensions escalated in May 2025 when the US imposed a 25% tariff on all Indian imports from 1 August, as well as an additional 25% tariff on its Russian oil imports.
The tariff reduction is set to support Indian exports. Despite the late-August tariff hike impacting trade, government figures show that Indian exports to the US rose by 15.9% year-on-year to reach $85.5 billion between January and November 2024, while imports stood at $46.1 billion over the same period.
Clean energy manufacturers are set to benefit significantly. Prashant Mathur, CEO of Saatvik Green Energy, described the tariff reduction as a strategic turning point and noted that India’s solar exports, including cells and modules, are already worth billions of dollars, with the US being its top overseas market. He highlights that the 7-percentage-point cut will boost cost competitiveness, US project profitability, and demand for Indian-made, high-efficiency products. It will also strengthen India’s role as a reliable alternative manufacturing base and ease concerns over Chinese tariff evasion.
Vikram Solar’s managing director, Gyanesh Chaudhary, has described the agreement as a structural turning point for India’s energy and clean technology exports. He points to improved price efficiency, supply certainty, and long-term demand visibility.
However, the deal may not protect all Indian solar exports. US Section 232 tariffs on polysilicon are expected to come into effect, which could increase the cost of some Indian PV exports. The US has also launched anti-dumping and countervailing duty investigations into crystalline silicon PV cells from India, Indonesia, and Laos. The US has proposed a dumping margin of 123.04% for India, although no tariffs have yet been applied while the investigation is ongoing.
The US remains India’s largest trading partner, with total goods and services trade rising by over 8% to reach $212.3 billion in 2024. US goods exports to India reached $41.5 billion, while services exports grew by 16% to reach $41.8 billion. The success of the deal in overcoming political frictions depends on the resolution of outstanding negotiation details.
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