Under the agreement, Indian exports to the US will now attract an 18% tariff, sharply lower than the 50% levy imposed earlier after Donald Trump claimed India would stop buying Russian oil. In return, India will move forward with cutting its tariff and non-tariff barriers on US goods to zero.
The development is significant for auto ancillary stocks, which have sizeable exposure to the US market. Any reduction in tariffs directly improves price competitiveness, margins and order visibility for Indian exporters. Lower trade barriers also strengthen long-term supplier relationships with US OEMs, providing a meaningful boost to export-led earnings growth.
According to a JM Financial report, the US accounts for 22% of Bharat Forge’s total sales. SAMIL and Happy Forgings derive 19% and 5%, respectively, from the US market, while Sona BLW and Uniparts India have a significantly higher exposure at 41% and 55%, respectively.
For Indian markets, the deal removes a major overhang that had kept foreign investors on the sidelines and dragged equities into a phase of prolonged underperformance. Markets struggled through January, with the Nifty losing over 1,000 points at its worst, even as foreign portfolio investors offloaded billions of dollars worth of stocks.
Persistent trade uncertainty, rupee weakness and a global risk-off environment had left Indian equities lagging peers across major markets. Analysts had repeatedly said that any breakthrough on the India-US trade front could serve as a catalyst for a broader market turnaround.
Reacting to Trump’s post, Prime Minister Narendra Modi thanked the US President.
“Wonderful to speak with my dear friend President Trump today,” Modi wrote on X. “Delighted that Made in India products will now have a reduced tariff of 18%. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement. When two large economies and the world’s largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation.”
Alongside the free trade agreement with the European Union concluded days earlier, India now has robust trade agreements with two of the world’s largest trading blocs—a first in the country’s economic history.
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