After Mother of All Deals, now comes Father of All Deals

After Mother of All Deals, now comes Father of All Deals

 By S.N. Verma

After concluding what was widely described as the “mother of all trade deals” with the European Union, India has now entered into what can legitimately be called the father of all deals—this time with the United States of America.

In a move that has surprised markets, analysts, and even critics, the United States officially announced a sharp reduction in tariffs on Indian goods—from an existing high of 50% down to 18%. This decision has come as a huge and unexpected gift to the Indian economy, carrying both immediate economic impact and long-term strategic significance.

Until this announcement, India and Brazil were jointly placed at the top of the list of nations facing the highest U.S. tariffs, both at 50%. With this trade deal, India not only sheds that disadvantage but emerges as the lowest-tariff country in Asia, just below Japan. It is worth recalling that Japan’s trade deal with the U.S. came at a heavy domestic political cost—the Japanese Prime Minister was compelled to resign for the compromises involved in reaching that agreement. India, by contrast, has managed to secure a remarkably favourable outcome without any visible political upheaval.

India now also stands as the lowest-tariff nation among the BRICS countries, a development that significantly strengthens its competitive position in global trade.

The immediate economic response to this announcement speaks volumes. The stock market, which had been witnessing a prolonged decline over the past several months, surged by 2,072 points soon after the deal was made public. The rupee, which had been under sustained pressure, registered a strong recovery, appreciating by 119 paise against the U.S. dollar. These indicators reflect renewed investor confidence and optimism about India’s economic trajectory. In the coming months, this deal is expected to aid recovery across multiple sectors of the economy.

The textile sector offers a clear illustration. With tariffs at 18%, India now enjoys a distinct advantage over key competitors such as Bangladesh, Vietnam, and Indonesia, all of whom face tariffs of around 20%. This marginal but crucial difference is likely to substantially boost India’s textile exports and reinforce its position in global supply chains.

One of the criticisms being raised is that the trade deal was announced by the United States and not by India. This criticism, however, misses a basic point. The higher tariffs were imposed and announced by the U.S. in the first place, and therefore only the U.S. could formally announce their reduction. There is nothing unusual or improper about this sequence.

Opposition parties have also alleged that India has bent backwards by compromising the interests of the agriculture, fishery, and dairy sectors. Factually, this allegation does not hold water. The Government of India has categorically stated that it has not diluted its stand in relation to these sensitive sectors. In the absence of any concrete evidence to the contrary, the criticism appears to be unfounded and politically motivated.

It is true that India may have had to show some flexibility regarding the purchase of petroleum products from Russia. The reality seems to be that India will likely reduce—though not entirely stop—its imports of Russian petroleum products. However, this decision too has been guided purely by national self-interest. India was purchasing petroleum from Russia because it was economically beneficial. Yet, without this trade deal with the U.S., India stood to lose nearly 40 billion dollars annually, as against gaining about 10 billion dollars by continuing such purchases from Russia. From that perspective, recalibrating energy imports is a rational economic choice, not a strategic surrender.

Even those who are critics of Prime Minister Narendra Modi would do well to acknowledge his role in securing this deal. Over the last seven months, he remained calm, quiet, and unprovoked despite intense pressure from both domestic and international quarters. He refused to compromise on core Indian interests—and in the end, that steadfast approach has paid dividends.

India has now been rewarded with what can rightly be described as the father of all trade deals with the United States—one that strengthens its economy, enhances its global standing, and underscores the value of patience, resolve, and strategic clarity in international negotiations.