An analysis by Moody’s Analytics has flagged “plenty of unknowns” in the newly announced India-US trade agreement. The report cautions that while the deal eases tariff pressure on Indian exports, key issues, particularly around Russian crude imports, remain unresolved.

In a report by Aditi Raman, associate economist, and Denise Cheok, economist, Moody’s said the pact assumes India will phase out purchases of Russian oil, though there has been no formal confirmation from New Delhi. “The deal assumes that India will end its purchase of Russian oil, but there has been no confirmation from India,” the report noted.

According to US officials cited in the analysis, India has agreed to gradually replace Russian crude with supplies from the U.S. and Venezuela.

Indian authorities, however, have not publicly endorsed that position.

While refiners have reduced Russian crude purchases in recent months, with imports falling 27% year-on-year in September and 34% in October, Moody’s warned that a complete pivot would be costly, given that Russia accounts for over 30% of India’s energy imports.

On the trade front, the agreement provides significant tariff relief.

The U.S. will reduce its base tariff rate on Indian goods to 18% from 50%, bringing the effective tariff burden down to around 15% after exemptions. The rollback follows months of elevated trade tensions linked to India’s continued energy trade with Moscow.

Prime Minister Narendra Modi, in an interview with Press Trust of India on Sunday, said India now negotiates trade agreements from a “position of strength,” citing political stability, expanding manufacturing capacity and a stronger services sector. “Political stability and political predictability have restored investor confidence in India,” he said, adding that India has concluded free trade agreements with at least 38 countries.

The Prime Minister said recent FTAs are designed to improve market access for MSMEs in sectors such as textiles, leather, chemicals, handicrafts and gems and jewellery.

The India-US breakthrough followed a telephonic conversation between PM Modi and US President Donald Trump, ending a period of sharp trade friction. Washington agreed to slash tariffs on Indian goods from 50% to 18%, including the removal of an additional 25% punitive levy imposed last year.

The deal comes amid a broader push by New Delhi to boost global trade ties. India recently concluded negotiations for a free trade agreement with the European Union, with European Commission President Ursula von der Leyen describing it as the “mother of all trade deals.” In July 2025, India also signed a comprehensive trade pact with the United Kingdom aimed at significantly boosting bilateral commerce.

While the tariff rollback offers relief to exporters, Moody’s said the overall economic impact of the India-US agreement will depend on clarity around energy commitments and the pace of implementation.
Source: Moneycontrol