From Textiles To Tech: Which Sectors Gain Most From The India-US Trade Deal?

In a move hailed as a significant boost to bilateral relations, the United States and India have finalized a trade agreement that slashes tariffs on Indian goods from 25% to 18%. This landmark deal, confirmed on February 2, 2026, by US President Donald Trump and Indian Prime Minister Narendra Modi, is expected to significantly enhance the competitiveness of Indian exporters and stimulate growth across various sectors. The immediate impact has been a surge in market optimism, with Indian equity markets opening with a historic rally.

Textiles and Apparels: A Major Win

The textile and apparel sector emerges as one of the most prominent beneficiaries of this trade pact. The United States accounts for approximately 28% of India's total textile exports, making it the single largest destination for these goods. Moreover, over half of India's textile and apparel imports are linked to US cotton, highlighting the deep integration of the textile industries in both countries.

The reduction in tariffs is poised to provide a substantial boost to Indian textile manufacturers by improving margins, enhancing competitiveness, and stimulating stronger export demand. Indian textile stocks have already seen a surge, with shares of companies like KPR Mill, Garware Technical Fibres, and Welspun Living jumping significantly. The tariff cut narrows the price gap for Indian exporters and benefits large suppliers serving US retailers in mid-value categories. With reduced tariffs, the industry anticipates improved capacity utilization and fresh investments.

Technology and Data Centers: A Burgeoning Partnership

Beyond traditional sectors, the technology industry is also set to gain significantly from this trade agreement. The deal is expected to encourage greater participation by US technology companies in India's cloud, data center, and artificial intelligence ecosystem, primarily through local partnerships and resellers. This comes at an opportune time, as the Indian government's recent budget introduced incentives for data centers, including a tax holiday extending up to 2047.

The agreement is expected to drive higher demand for data centers, cloud services, and AI infrastructure, reinforcing India's position as a strategic technology partner. Experts predict that US tech firms will increase their provision of cloud services and expand AI services in India through Indian resellers. Moreover, the deal is expected to strengthen "Make in India" efforts and encourage trusted technology ties.

Other Sectors to Watch

Several other sectors are also expected to experience positive impacts from the reduced tariffs. These include:

• Seafood: The seafood segment, particularly shrimp and frozen food exporters, relies heavily on the US market. With tariffs coming down, companies in this segment could see sharper improvement in earnings visibility and demand recovery.
• Automobiles and Auto Components: The auto and auto ancillary sectors are also likely to benefit from improved competitiveness.
• Engineering Goods: Engineering goods, including auto components, industrial machinery, and electrical equipment, constitute a significant portion of India's exports to the US and are expected to gain a competitive edge.
• Chemicals: The specialty chemicals sector is expected to benefit through supply chain positioning.

Geopolitical Implications and Future Outlook

The India-US trade deal also carries significant geopolitical implications. Prime Minister Modi has reportedly agreed to stop purchasing Russian oil and instead increase imports from the United States. This move aligns with the US's efforts to counter Russian aggression and strengthen energy security.

Looking ahead, experts anticipate further negotiations to address a broader set of issues, including economic security, technical barriers to trade, digital trade, and intellectual property rights. This agreement is viewed as a crucial step towards a more comprehensive bilateral trade relationship, with the potential to unlock immense opportunities for mutually beneficial cooperation.