On Monday, Donald Trump announced that US will reduce reciprocal tariffs on India to 18 per cent and also hinted that a trade deal would be finalized soon.
“The reduced tariffs will help strengthen the strategic and economic ties between our two great countries and provide additional opportunity for investment and collaboration. We are committed to expanding our presence and investments in the U.S., where we see substantial opportunities for innovation, growth and enduring partnerships,” Kumar Mangalam Birla, Chairman, Aditya Birla Group, said.
“The India–US trade deal is a much awaited and a significant milestone for both the nations, unlocking immense opportunities for investments, growth. The flurry of FTA’s is an affirmation of India’s role at the centre of global frameworks, aimed at building resilient international trade patterns,” Sunil Bharti Mittal, Founder & Chairman, Bharti Enterprises, said.
“The recent India US trade agreement, which has led to a significant rollback of punitive tariffs and reduced US duties on Indian goods to a more competitive level, is a watershed moment for export oriented sectors like textiles and apparel. Indian textile exports to the US were under pressure due to the tariff overhang, impacting clusters such as Tiruppur and other MSME hubs. With these barriers now easing, we expect a revival in export demand, healthier order pipelines and improved pricing power for exporters,” Salee Nair, MD and CEO, Tamilnad Mercantile Bank, said.
This is likely to translate into higher working capital requirements, capacity expansion and greater demand for structured trade finance and credit support from the banking system. For banks like Tamilnad Mercantile Bank, with deep-rooted relationships in textile and MSME clusters across Tamil Nadu, this creates an opportunity to support sustainable growth through timely credit, export finance and supply chain solutions. When viewed alongside agreements such as the India EU deal, these developments strengthen India’s export ecosystem and align well with the Viksit Bharat 2047 vision of a globally competitive, manufacturing led economy, he said.
“The India–US trade deal is a much-awaited development. With US tariffs earlier reaching 50 per cent, Indian exporters were at a disadvantage compared to peers like Vietnam, Japan and Bangladesh, where effective tariffs were much lesser. The proposed reduction to 18 per cent restores competitiveness and signals a more pragmatic approach to bilateral trade. This is based on public announcements from leadership of India and US, with detailed agreement text awaited.
“The U.S. decision to reduce tariffs on Indian goods to a headline rate of 18 percent marks a clear de-escalation in bilateral trade frictions and reflects aligned strategic intent on both sides. The move reinforces India’s export-competitive posture, supported by recent customs duty rationalisation, and comes amid a broader U.S. supply-chain recalibration away from China,” Rudra Kumar Pandey , Partner, Shardul Amarchand Mangaldas & Co., said.
What is particularly encouraging is that Indian industry has already demonstrated resilience through market diversification. Exports to Spain, for instance, reportedly rose by over 56 percent to about USD 4.7 billion during April–November FY 2025–26, underscoring the ability of Indian exporters to scale in alternative markets. The reopening of the U.S. market, alongside improving access to Europe through the momentum of the India–EU trade agreement, positions these sectors to return to a stronger and more sustained growth trajectory, he said.
The immediate gains will be concentrated in tariff-sensitive and labour-intensive sectors that are most responsive to marginal duty changes. Textiles and apparel, gems and jewellery, leather and footwear, engineering goods, and auto components stand to benefit disproportionately, as these sectors compete directly with Vietnam and Bangladesh in the U.S. market. Lower effective tariffs improve India’s relative cost position and are likely to translate quickly into higher order flows and sourcing diversification in India’s favour, Pandey said.
Importantly, export momentum to the U.S. has already demonstrated resilience, even during the period of elevated trade friction. India’s exports to the U.S. rose by 11.3 percent to approximately USD 59 billion between April and November 2025, with smartphone shipments doubling to USD 16.7 billion. A rationalisation of tariff lines towards an effective rate of around 18 percent reinforces this trajectory and provides a durable tailwind for further export expansion across multiple manufacturing segments, he added.
“The announcement that India could import up to USD 500 billion of goods from the United States forms an explicit part of the broader tariff-reset package and underscores the strategic balance of the agreement,” Pandey said.
“The expansion of imports is expected to be concentrated in energy, advanced technology, and capital goods, including LNG and crude oil, industrial machinery, aircraft components, and defence-related platforms. Greater access to U.S. energy supports India’s supply diversification objectives, while increased inflows of high-value capital equipment and technology strengthen domestic manufacturing capability and productivity. Together, these measures anchor a more strategic and mutually reinforcing bilateral trade relationship with clear net gains for India,” he added.
“The conclusion of the India–US trade agreement and the associated tariff realignment is a constructive policy development for Indian exporters, including the value-added dairy segment,” K. Rathnam, Whole-time Director and Chief Executive Officer, Milky Mist Dairy Food Ltd, said.
Greater clarity on tariffs helps create a more predictable trade environment for products such as cheese, ghee and specialised dairy ingredients. Over time, developments like these can contribute to strengthening the broader dairy ecosystem, spanning farmers, processors and allied stakeholders, while enabling more consistent engagement with international markets,” he said.
“The finalisation of the India-US trade deal is a watershed moment for our nation and a major boost for the ‘Made in India’ brand,” Ajay Singh, Chairman and Managing Director, SpiceJet, said.
Coming on the back of recent trade agreements with the EU and the UK, this deal reinforces India’s growing confidence and credibility on the global stage and lays the foundation for sustained growth and stronger international partnerships, he said.
“The Gem & Jewellery Export Promotion Council (GJEPC) has hailed the landmark India-U.S. trade agreement as a “vital relief measure for India’s gem and jewellery sector”, which faced severe pressure from escalating U.S. tariffs, said its Chairman Kirit Bhansali.
The U.S. remains India’s largest gem and jewellery export market, accounting for 31% (USD 9.23 billion) of total exports in FY 2024–25, he said in a statement.
In 2025, reciprocal U.S. tariffs disrupted trade flows to USA sharply. Duties on polished diamonds and coloured gemstones surged from 0 per cent to 10 per cent in April, then to 50 per cent by August—unviable for these raw materials, which strained working capital, liquidity, and margins. Jewellery duties jumped from 5–7 per cent to 55–57 per cent, it added.
This led to a 44.42 per cent plunge in India’s gem and jewellery exports to the U.S. from April–December 2025 (USD 8,691.25 million to USD 3,862.08 million), the statement added.
GJEPC said it is optimistic that based on India signing the trade deal loose diamonds and coloured gemstones from India will get the benefit of zero duty imports in USA, providing much-needed support for diamond exports. This will enhance trade flows, rebuild confidence, and deliver a strong sector-wide boost.
The Federation of Indian Export Organisations (FIEO) hailed the progress on India-US trade deal and termed it as ‘Father of All Deals’, under which the United States has agreed to reduce tariffs on all Indian-made products to 18 per cent, marking a significant milestone in further boosting and strengthening bilateral trade relations between the two countries.
S C Ralhan, President, FIEO, said that the agreement would enhance the competitiveness of Indian products in the US market and provide a strong impetus to India’s export growth across sectors.
It reflects the growing strategic and economic partnership between India and the United States and opens up vast opportunities for Indian exporters, particularly MSMEs, he said.
Ralhan highlighted that sectors such as engineering goods, textiles and apparel, pharmaceuticals, chemicals, leather products, gems and jewellery, and agricultural products are expected to gain significantly from the tariff rationalisation.
“Lower tariffs will not only improve price competitiveness but also help Indian exporters integrate more deeply into US supply chains. This agreement will encourage capacity expansion, attract fresh investments, and support job creation in export-oriented industries,” he added.
The reduction in tariff to 18 per cent from 50 per cent, would be a major game-changer for the competitiveness of Indian exports vis-à-vis other Asian suppliers.
“It is expected to lead to an immediate and substantial release of orders that were earlier put on hold, particularly in labour-intensive sectors such as apparel, textiles, leather and footwear, where global buyers typically lock in summer season sourcing by December. With sharper price parity, improved tariff certainty, and strong buyer confidence in Indian suppliers, these sectors are poised for a rapid surge in orders and a strong acceleration in export growth in the coming months,” Ralhan, said.
“Finalising the trade agreement with India’s most important Trade partner, will enhance the global competitiveness of Indian products while catalysing manufacturing growth, employment creation, and the development of resilient supply chains. The India-US trade deal underscores the shared commitment of India and the United States to deepen trade technology & investment ties in an increasingly competitive global landscape,” Rajiv Memani, President, CII, said.
Chandrajit Banerjee, Director General, CII, said the agreement is not just about tariffs; it provides certainty for investors, enhances the supply chains’ resilience, and lays the foundation for deeper collaboration.
“The agreement will strengthen bilateral ties, clear economic uncertainties, and significantly benefit employment-intensive sectors such as marine products, shrimp, gems and jewelry, engineering, textiles, and auto components. The deal will support growth, expand access to the US market, boost two-way trade and investment, and deepen ties between the world’s two largest democracies,” Vijay Shankar, Senior Vice President of FICCI, said.
