President Donald Trump on Monday (February 2), said he and Prime Minister Narendra Modi agreed on a broad India-US trade agreement. The announcement of the trade pact by Trump, which ends months of tensions, will boost Indian exports. It would position Delhi as a key alternative to China in global supply chains. In effect, the deal, after coming into effect, would prove to be a booster shot for India, which is competing with China in its manufacturing and commercial space, say experts. Beyond just being a trade deal, the India-US FTA will give India a strategic edge, especially against China. US Vice President JD Vance earlier said that the deal "aims to rebalance global trade".
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Washington has long held that global trade has been tilted towards China. As Vance said during his India visit in April 2025, "India and the US finalising the terms of references for the trade deal is a vital step and sets a roadmap for the final deal".
The announcement of the agreement, which slashed tariffs on Indian exports to the US down to 18% from 50%, is lower than rates on competitors.
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