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

Trump announced the deal on social media following a call with Indian Prime Minister Narendra Modi, noting that India would now buy oil from the US and potentially Venezuela.

A White House official told Reuters that the US was rescinding a punitive 25 percent duty on all imports from India over its purchases of Russian oil that had stacked on top of a 25 percent "reciprocal" tariff rate.

US-listed shares of major Indian companies rallied on the news. IT consulting firm Infosys closed 4.3 percent higher, consultancy Wipro rose 6.8 percent, HDFC Bank gained 4.4 percent and the iShares MSCI India exchange-traded fund rallied 3 percent.

Trump's announcement added to positive sentiment over semiconductor makers and artificial intelligence, lifting major indexes into positive territory on the day.

Modi also committed India to "BUY AMERICAN at a much higher level," in addition to buying more than US$500 billion worth of US energy, including coal, along with technology, agricultural and other products, Trump added.

"They will likewise move forward to reduce their Tariffs and Non Tariff Barriers against the United States, to ZERO," Trump said of India.

Until Trump returned to office and raised US tariff rates to double-digit levels last year, India had some of the world's highest tariffs, with a simple applied rate of 15.6 percent and an effective applied tariff of 8.2 percent, according to World Trade Organization data.

Trump's Truth Social message provided few details, ⁠including on the start date for the lower tariff rates, the deadline for India to end Russian oil purchases, trade barrier reductions and which US products India had committed to purchasing.

Previous trade deals with other major Asian trading partners including Japan and South Korea have included commitments to invest hundreds of billions of dollars into US industries, but the India announcement did not mention any specific investments.

The deal brings India "broadly in line with its Asian peers on tariff rates" of 15 percent to 19 percent, said Madhavi Arora, economist at Emkay Global, adding that it would eliminate a disproportionate drag on India's exports and its rupee currency.

Indian markets had been battered since the tariffs were levied by Washington, making it the worst-performing market among emerging nations in 2025, with record outflows of foreign investors.

US business groups reacted with caution and criticism.

The US Chamber of Commerce, which has long advocated a market-opening trade deal with India, called Trump's announcement progress towards that goal.

"We are optimistic that this is the first step toward a comprehensive trade agreement that will unlock even more private sector collaboration, and we look forward to reviewing the details of the deal," Chamber CEO Suzanne Clark said in a statement.

A coalition of more than 800 small businesses called "We Pay the Tariffs" urged Americans not to celebrate the deal, which it called a "600% tax increase on American businesses compared to 2024."

The group noted that US tariffs on Indian imports were about 2 percent to 3 percent at that time but would now be 18 percent and could go higher if India does not fully wean itself off Russian oil.

"Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18 percent," Modi said in a social media post on X.

"Big thanks to President Trump on behalf of the 1.4 billion people of India ⁠for this wonderful announcement."

India's Trade Minister Piyush Goyal said the deal would draw the US and Indian economies closer together. " (Reuters)