In a significant development for bilateral trade relations, India and the United States have announced a crucial trade agreement that brings immediate relief to Indian exporters. Washington has decisively reduced reciprocal tariffs on Indian goods to 18% from the previous 25%, a move that is effective immediately and signals a substantial reset in trade dynamics between the two major economies.
Swift Implementation and Mutual Benefits
US President Donald Trump confirmed the development, stating emphatically, “We agreed to a Trade Deal between the United States and India, whereby the United States will charge a reduced Reciprocal Tariff, lowering it from 25% to 18%. They will likewise move forward to reduce their Tariffs and non-tariff barriers against the United States to ZERO.” This statement underscores the swift implementation timeline and the commitment to mutual market access that characterizes this landmark agreement.
The announcement comes after a prolonged period where tariffs as high as 50% had severely hurt the competitiveness of Indian goods in the lucrative US market. This situation led to significant margin pressure and considerable uncertainty across various export-linked sectors. With tariffs now substantially lowered, companies with meaningful exposure to the US market are expected to witness improved order visibility, margin expansion, and stronger pricing competitiveness.
Positive Impact on Indian Equities
Sonam Srivastava, Founder and Fund Manager at Wright Research PMS, highlighted that the reduction in tariffs from 25% to 18% under the newly signed India–US trade deal represents a meaningful positive for Indian equities. This impact is evident both from a sentiment perspective and an earnings visibility standpoint, potentially boosting investor confidence across the board.
Sectors Poised for Focus After Tariff Relief
The reduction in US reciprocal tariffs to 18% is expected to shift investor attention decisively toward export-oriented sectors where earnings had previously come under considerable pressure due to higher duties. With pricing competitiveness improving and margin headwinds easing, companies with significant US revenue exposure could experience better order visibility and enhanced profitability.
As Divam Sharma, Co-Founder and Fund Manager at Green Portfolio PMS, observed, “Key sectors that can benefit include textiles and apparel, auto ancillaries and engineering, speciality chemicals, agro and seafood exports, and select electronics and consumer manufacturers with US exposure. This aligns well with the recent budget, which clearly focuses on exports, manufacturing, and integrating India deeper into global supply chains.”
Textiles and Apparels: A Major Beneficiary
India’s textile and apparel sector stands out as one of the biggest beneficiaries of this transformative trade pact. The US accounts for nearly 28% of India’s total textile exports, making it the single largest destination. Additionally, more than half of India’s textile and apparel imports are linked to US cotton, highlighting the deep trade integration between the two nations.
After enduring prolonged pressure due to escalating tariff costs, the sector now stands to gain significantly through better margins, improved competitiveness, and stronger export demand. Stocks to watch in this sector include:
- Welspun India
- Trident
- Indo Count Industries
- Gokaldas Exports
- Pearl Global
- Himatsingka Seide
- Vardhman Textiles
- SP Apparels
- Arvind
- KPR Mills
Seafood: Enhanced Earnings Visibility
The seafood segment, particularly shrimp and frozen food exporters, relies heavily on the US market for its growth trajectory. With tariffs coming down substantially, companies in this segment could witness sharper improvement in earnings visibility and demand recovery. Exporters with a higher dependence on the US are expected to benefit faster as pricing pressures ease and buyer confidence returns.
Stocks to watch in this segment include:
- Avanti Feeds
- Apex Frozen Foods
- Waterbase
Automobiles and Auto Ancillaries: Strengthened Positioning
Auto component manufacturers with strong US exposure may see sustained order inflows from global OEMs. Lower tariffs can help protect margins and reinforce India’s positioning as a cost-efficient manufacturing hub. The sector, which had been navigating margin pressures due to tariff costs, now finds itself in a more favourable competitive position.
Stocks to watch in this sector include:
- Sona BLW
- Ramkrishna Forgings
- Bharat Forge
- Tata Motors
- Samvardhana Motherson
- Balkrishna Tyres
- Sansera Engineering
- Apollo Tyres
Chemicals: Improved Export Competitiveness
Specialty and agrochemical companies with the US as a key end market are likely to gain from improved export competitiveness. The reduction in tariffs offers room for margin expansion and better order visibility for chemical manufacturers that had been facing persistent pricing headwinds.
Stocks to watch in this sector include:
- UPL
- SRF
- Jubilant Ingrevia
- Aarti Industries
- PI Industries
- Atul
- Navin Fluorine
- Deepak Nitrite
- Vinati Organics
- Alkyl Amines
- Gujarat Fluorochemicals
Consumer: Incremental Benefits for Exporters
Select consumer exporters, particularly in packaged food and rice products, could also see incremental benefits. With improved access to the US market and reduced pricing pressure, these companies may experience better demand traction and export growth.
Stocks to watch in this segment include:
- LT Foods
- KRBL
- Tata Consumer Products
Gems and Jewellery: Restored Confidence
The tariff reduction also brings much-needed relief to India’s gems and jewellery sector, which depends significantly on the US as a primary consumer market. Colin Shah, MD, Kama Jewelry, highlighted that this partial relaxation is likely to restore confidence among Indian exporters and American buyers after months of tariff-related sentiment pressure.
Overall Implications and Future Outlook
The easing of US tariffs is emerging as a meaningful positive for multiple export-oriented sectors across the Indian economy. With margins improving, competitiveness strengthening, and order pipelines becoming clearer, the India–US trade deal could act as a powerful catalyst for export-driven earnings revival across several key industries.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
