Under the agreement, Indian exports to the US will now attract an 18% tariff, lower than competing garment-exporting hubs Vietnam and Bangladesh, both of which face tariffs of 20%. Overall, tariffs on India will be reduced to 18% from 50%. India, in turn, will move forward to cut its tariff and non-tariff barriers on US goods to zero.
Textile stocks had borne the brunt of selling ever since the announcement of reciprocal tariffs and trade deals between the US and other countries, given the sector’s heavy dependence on the US market. Most listed textile exporters derive 50%–70% of their total revenue from the US. Gokaldas Exports, Welspun Living and Indo Count generate close to 70% of their revenue from the US, while Pearl Global and KPR Mills derive around 50%.
For Indian markets, the deal removes a key overhang that had kept foreign investors cautious and pushed equities into a phase of prolonged underperformance. Indian markets struggled through January, with the Nifty shedding over 1,000 points at its worst, while foreign portfolio investors sold billions of dollars worth of equities.
Persistent trade uncertainty, a weakening rupee and global risk-off sentiment had made Indian equities among the weaker performers across major markets. Analysts had consistently maintained that any breakthrough on the India-US trade front could act as a trigger for a 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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