On February 2, 2026, US President Donald Trump announced that the United States and India have agreed to a long-awaited trade deal. The agreement involves the United States reducing its reciprocal tariffs on India from 25% to 18%. In return, India will reduce tariffs and non-tariff barriers on US goods to zero. The trade deal is effective immediately.

Key Benefits for Indian Exports

The reduction in tariffs is expected to provide immediate relief for Indian companies with significant exposure to the US market. Lower tariffs should lead to improved competitiveness, better order visibility, and increased profit margins for Indian exporters. Prime Minister Modi expressed his gratitude to President Trump, stating that the reduced tariff of 18% on "Made in India" products is delightful and that this partnership will benefit the people of both nations by unlocking opportunities for cooperation.

Sectors Expected to Benefit

Several sectors within India are poised to gain significantly from this trade agreement. Key beneficiaries include:

• Textiles: The textile industry is expected to see a boost in exports to the US due to lower tariffs.
• Seafood: Indian seafood exporters will likely find it easier to compete in the US market.
• Auto Ancillaries: This sector, which produces automotive components, anticipates improved access to the US market.
• Chemicals: The chemical industry is another sector that stands to benefit from reduced tariffs.
• Select Consumer Companies: Certain consumer-focused companies are also expected to experience positive impacts.

Broader Economic Implications

Analysts believe that this trade deal could enhance market confidence and attract foreign investment into India. Union Minister Ashwini Vaishnaw stated that the agreement is a win-win deal that will benefit citizens and industries in both countries. The deal is expected to promote economic growth and stability. President Trump noted that India has agreed to purchase more than $500 billion worth of US energy, technology, agriculture, and coal products. Trump also stated that India agreed to cease purchasing Russian oil and instead buy more from the US and potentially Venezuela.

Strategic Context

This trade agreement comes shortly after India finalized a trade deal with the European Union, signaling a diversification of its global partnerships. The US-India trade deal is expected to strengthen the strategic dimension of their bilateral relationship. India is considered an important contributor to the US technology sector, with complementary capabilities for joint development and production of critical and emerging technology products. Moreover, India hosts approximately 2,000 US companies and can be a significant purchaser of US energy and defense equipment.

Impact on Consumers

The reduction in tariffs and non-tariff barriers could lead to lower prices for consumers in both countries. Increased trade and investment flows may also create more job opportunities.

In conclusion, the newly announced trade deal between India and the US is expected to have a positive impact on Indian exports, particularly in sectors like textiles, seafood, auto ancillaries, and chemicals. The agreement is anticipated to enhance the strategic relationship between the two countries, promote economic growth, and benefit consumers.