NEW DELHI, Feb 3 (Reuters) - U.S. President Donald Trump's move to slash tariffs on Indian imports sparked a relief rally across the Asian country's markets on Tuesday, lifting sentiment among exporters and policymakers even as details of the agreement remained scant.
Trump announced a trade deal with India on Monday to cut tariffs to 18% from 50% in exchange for New Delhi halting Russian oil purchases and lowering trade barriers.
Trump's social media post was not followed by details of the deal from the White House or the Indian government.
An Indian government official said India had agreed to buy petroleum, defence goods and aircraft from the U.S., while partly opening up its guarded agriculture sector under the agreement.
New Delhi also lowered tariffs on imported cars to address Washington's immediate demands, according to the official. Another Indian official said New Delhi agreed to give zero tariffs to industrial goods coming into the country from U.S.
JOINT STATEMENT ON DEAL EXPECTED SOON
After a "final understanding" of the deal was signed, the two nations would share details, India's Trade Minister Piyush Goyal said late on Tuesday, adding that a joint statement would be issued soon.
Trump said, without giving a time frame, that India would buy more U.S. goods, with purchases rising to over $500 billion, including energy, coal, technology and agricultural products.
Indian trade officials said India would achieve that figure over 5 years.
"India's tariff agreement with the U.S. removes its earlier disadvantage versus peers," said Neelkanth Mishra, chief economist at Axis Bank.
The deal helps affected Indian gems and jewellery, leather, plastics, ceramics and auto components and non-tech foreign investment, he added.
Among Asian peers, U.S. tariffs on goods from Indonesia stand at 19% while the rate for Vietnam and Bangladesh is 20%.
India's exports to the U.S. rose 15.88% year-on-year to $85.5 billion in January-November, while imports stood at $46.08 billion, Indian government data showed.
The announcement of the trade deal reduced a great deal of global uncertainty, India's economic affairs secretary, Anuradha Thakur, said in New Delhi on Tuesday.
It also lifted investor sentiment. India's shares notched their best day in nine months and the rupee rose 1.36% to 90.2650 per dollar, its best one-day gain since December 2018.
"Lower tariffs will not only improve price competitiveness but also help Indian exporters integrate more deeply into U.S. supply chains,” said S.C. Ralhan, president of the Federation of Indian Export Organisations.
Lower U.S. tariffs on most Indian goods will reinvigorate exports to the U.S., Moody's Ratings said in a statement.
DESPITE TRUMP ANNOUNCEMENT, DEAL DETAILS SCANT
Despite the announcement by Trump and a post on X from Indian Prime Minister Narendra Modi, details of the deal remain scant.
Indian refiners will need a wind-down period to complete Russian oil deals before imports can be stopped, and the government hasn't yet ordered such a halt, Reuters reported.
The Kremlin said it had heard no statements from India about halting purchases of Russian oil.
Moody's said immediately stopping Russian oil imports could disrupt India’s economic growth.
It could "could also tighten supply elsewhere, raise prices and pass through to higher inflation given that India is one of the world’s largest oil importers,” Moody's said.
The India-U.S. trade deal will ensure more exports of American farm products to India's massive market, U.S. Agriculture Secretary Brooke Rollins said on social media, without giving any details.
In the past, India's trade deals have excluded some sensitive farm and dairy items, as New Delhi maintains the need to protect millions of subsistence farmers.
(Additional reporting by Nikunj Ohri in New Delhi; Graphics by Vineet Sachdev; Editing by Raju Gopalakrishnan and Bernadette Baum)
