The recent trade agreement between India and the United States is expected to significantly boost order books for Indian companies, particularly those in the textile, jewelry, and engineering sectors. The deal, which includes a reduction of US tariffs on Indian goods, is predicted to enhance the competitiveness of Indian exports and drive substantial growth in overseas shipments.
Under the new agreement, tariffs have been reduced from 25% to 18%. This reduction is especially important for sectors with low operating margins, allowing exporters to either retain the benefit to improve profitability or pass on part of the savings to US buyers.
The textile and apparel sector is expected to be a major beneficiary of the trade deal. The United States is the largest destination for Indian textile exports, accounting for nearly 28% of the total. With reduced tariffs, Indian textiles, including cotton garments, home textiles, and made-ups, will be more competitive against products from Bangladesh, Vietnam, and other low-cost producers. Companies with significant US revenue exposure, such as Indo Count Industries, Kitex, and Gokaldas Exports, are likely to see faster volume recovery and improved pricing power.
The gem and jewelry sector also stands to gain from the tariff reduction. These exports are highly competitive and sensitive to tariffs, which affect retail pricing and inventory costs. The lowered tariffs will reduce landed costs, easing pressure on margins for US wholesalers and retailers.
Engineering goods, which constitute a significant portion of India's exports to the US, are also expected to benefit. This category includes auto components, industrial machinery, electrical equipment, and capital goods. The improved competitiveness resulting from the tariff reduction should lead to increased orders and market share for Indian engineering companies.
Economists and market analysts anticipate a positive impact on Indian exports and financial markets. Radhika Rao, a senior economist at DBS Singapore, noted that the deal is a "breakthrough" that is "unmistakably positive" for the real economy, exports, sentiment, and financial markets. Trideep Bhattacharya, President and CIO at Edelweiss Asset Management, Mumbai, added that the tariff reduction, combined with the recently concluded India-EU trade agreement, represents a strong external growth stimulus for the Indian economy in 2026.
The trade deal is expected to stabilize the rupee and ease pressure on domestic interest rates. Moreover, increased investor confidence is expected to drive discretionary spending, boosting urban consumption and contributing to overall economic growth.
Overall, the India-US trade deal is poised to create new opportunities and drive growth for Indian businesses across multiple sectors. The expected rise in overseas shipments and improved competitiveness will strengthen India's position in the global market.