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It's a deal
Business Standard
|February 04, 2026
India must continue with reforms
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Patience appears to have paid off. After speaking to Prime Minister Narendra Modi late on Monday (India time), United States (US) President Donald Trump announced that, effective immediately, both sides had agreed to a trade deal under which the US will reduce the reciprocal tariff from 25 per cent to 18 per cent. In fact, the relief is much bigger, which was also reflected in the stock market — the benchmark BSE Sensex gained 2.5 per cent on Tuesday.
Aside from the so-called reciprocal tariff of 25 per cent, the US had imposed an additional 25 per cent tariff on India for importing crude oil from Russia, placing Indian exporters at a significant disadvantage. Now with an 18 per cent tariff, though still high in the historical context, India now has a tariff advantage of 1-2 percentage points over countries such as Vietnam and Bangladesh.
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