The newly announced US–India trade agreement may provide partial relief to Indian exporters, but significant uncertainties remain, according to an analysis by Moody’s Analytics.
In its latest assessment, Moody’s noted that while the agreement lowers tariff burdens and improves market access, several key aspects of the deal remain unclear — particularly regarding India’s energy imports.
The report, authored by economists Aditi Raman and Denise Cheok, highlighted that the agreement appears to assume India will gradually stop purchasing Russian crude oil. However, Indian authorities have not officially confirmed such a commitment.
According to US officials, India has agreed to phase out Russian oil imports and shift toward crude supplies from the United States and Venezuela. Yet Indian officials have not publicly endorsed this claim. Data shows that Indian refiners have already reduced their intake of Russian crude, with imports declining 27% year-on-year in September and 34% in October.
Moody’s pointed out that India currently sources more than 30% of its total energy requirements from Russia. Any large-scale shift away from Russian crude could prove financially challenging, potentially raising input costs for domestic refiners and impacting energy prices.
On the trade front, the United States has agreed to reduce its base tariff rate on Indian goods from 50% to 18% under the new agreement. After exemptions are factored in, the effective tariff rate is expected to fall from roughly 25% to about 15%, offering competitive relief to Indian exporters.
While the tariff reduction is viewed as a positive development, Moody’s emphasized that the broader implications — particularly in the energy sector — remain uncertain. The cost, logistics, and long-term sustainability of replacing Russian crude with alternative suppliers could significantly influence the deal’s overall economic impact.
The analysis concludes that although the agreement marks progress in strengthening economic ties between the two countries, important operational and policy details are still awaited.
Originally published on 24×7-news.com.
