India has agreed to purchase petroleum, defence goods, aircraft, and other U.S. products under a landmark trade deal, a government official told Reuters on Tuesday.

The agreement comes after months of negotiations and aims to strengthen economic ties while addressing trade imbalances.

India will buy American goods across several sectors, including pharmaceuticals, telecom, defence, petroleum, and aircraft. The deal is intended to gradually reduce the U.S.-India trade deficit while opening new avenues for collaboration in energy, technology, and agriculture.

U.S. President Donald Trump announced the agreement on Monday, highlighting that India would “BUY AMERICAN at a much higher level,” with potential purchases exceeding $500 billion.

Tariff reductions and Russian oil halt

As part of the deal, the U.S. will cut tariffs on Indian goods from 25% to 18%, while India has agreed to halt purchases of Russian oil and reduce its trade barriers to zero. Trump also confirmed that the additional 25% tariff penalty related to Russian oil would be dropped immediately.

India, in return, has agreed to expand purchases of U.S. energy, coal, technology, agriculture, and other products over the coming years. The commitment includes gradual increases in sectors like defence and aircraft, supporting long-term bilateral trade growth.

India’s exports to the U.S. grew 15.88% year-on-year to $85.5 billion between January and November, while imports stood at $46.08 billion, according to the commerce ministry. The trade deal is seen as the first tranche of a broader agreement, with further negotiations expected in the coming months.

The deal follows India’s recent landmark agreement with the European Union, underscoring its push to expand international trade partnerships while balancing strategic economic interests.

Prime Minister Narendra Modi expressed delight at the agreement on X (formerly Twitter), while Trump noted that discussions also included the Russia-Ukraine conflict. The deal signals a deepening of U.S.-India economic and strategic ties, particularly in energy security and defence cooperation.

Analysts say the agreement could reshape global trade flows, support U.S. exports, and provide India with access to critical technologies and energy supplies.