India-US trade deal cuts tariffs, lifts key export sectors

February 4, 2026 Hot from the Oven Valli Sarvani

Global trade shifts often reshape economies, and the new India–US trade deal marks such a moment for Indian exporters.

Under the agreement, tariffs on Made in India goods entering the US fall sharply from 50% to 18%.

This move provides significant relief to export-oriented sectors and enhances India’s global competitiveness.

US President Donald Trump announced the decision after speaking with Prime Minister Narendra Modi. Soon after, PM Modi welcomed the move, calling it a major boost for Indian products and exporters.

The reduced tariff directly benefits textiles and apparel, seafood, auto ancillaries, engineering goods, chemicals, gems and jewellery, and select consumer exports. Among these, textiles stand out as the biggest gainer.

With an 18% tariff, Indian garments now gain an edge over Bangladesh and Sri Lanka, both facing 20%. Indian carpets also regain competitiveness against Turkey.

Companies such as Welspun India, Trident, Indo Count Industries, and Kitex are expected to benefit.

Deepak Garg of Avax Apparels highlights the relief for MSMEs. The US absorbs nearly 28% of India’s textile exports, valued at $10.05 billion in FY24.

High tariffs had earlier caused a 31.4% year-on-year drop in US imports, hurting MSMEs that form over 70% of the sector. The deal restores demand and supports millions of livelihoods.

Seafood exporters also gain significantly. The US remains India’s largest seafood market. Lower tariffs improve margins and revive demand, especially for shrimp.

Companies like Avanti Feeds and Apex Frozen Foods benefit from better price competitiveness against Vietnam and Indonesia. Reduced duties on feed additives imported from the US further lower farming costs.

Auto ancillaries are another key beneficiary. Indian component makers supply major global OEMs. With lower tariffs, firms such as Sona BLW, Tata Motors, and Bharat Forge can sustain orders and improve margins, strengthening India’s manufacturing appeal.

The chemicals sector, particularly agrochemicals, also stands to gain. The US is a major end-market, and reduced tariffs improve margins for players like UPL and SRF.

Select consumer exporters, including packaged food and rice companies like Tata Consumer Products, LT Foods, and KRBL, may see incremental growth.

Solar manufacturers also welcome the clarity. They note that predictable tariffs help firms plan exports and strengthen supply chains.

Notably, this deal follows India’s recently concluded Free Trade Agreement negotiations with the European Union, signalling deeper global trade integration and stronger export momentum ahead.

Image Credit: StuckInLagToad, CC BY-SA 4.0, via Wikimedia Commons