India-US Trade Deal: Tariffs Cut to 18%
India and the US have recently announced a significant trade deal that is set to reshape export dynamics between the two nations. By reducing reciprocal tariffs on Indian goods from 25% to 18%, the deal provides immediate relief to Indian exporters. This move is effective right away and signifies a positive shift in trade relations.
US President Donald Trump confirmed the deal, stating, “We agreed to a Trade Deal between the United States and India...”. This reduction in tariffs is expected to enhance market access for Indian products in the US, which has been crucial for several sectors.
The previous high tariffs, sometimes reaching 50%, had severely affected the competitiveness of Indian goods in the US market. Now, with lower tariffs, Indian companies are poised to benefit from improved order visibility, better margins, and a stronger competitive position. Analysts suggest that the reduction from 25% to 18% is a meaningful boost for Indian equities.
Several sectors are identified as key beneficiaries of this trade deal. The textiles and apparel sector, which constitutes a significant portion of India's exports to the US, is expected to see substantial gains. With the US accounting for nearly 28% of total textile exports, the reduction in tariffs will enhance margins and competitiveness.
The seafood sector, particularly exporters of shrimp and frozen foods, will also benefit from improved demand as tariffs ease. Similarly, the automobile and auto ancillary industries are likely to experience sustained order inflows, positioning India as a cost-effective manufacturing hub.
Chemical companies, especially those in specialty and agrochemicals, can expect better export competitiveness. Additionally, select consumer exporters in packaged foods and rice products may see improved demand traction due to reduced pricing pressures.
Finally, the gems and jewellery sector, which heavily relies on the US market, will also benefit from this tariff reduction, likely restoring confidence among Indian exporters. Overall, the India-US trade deal emerges as a catalyst for a potential earnings revival across multiple sectors, paving the way for a brighter export-driven future.
