India-US trade pact triggers sector reshuffle; here are key sectors in focusIndia-US trade pact triggers sector reshuffle; here are key sectors in focus

Introduction

Leading export-oriented sectors gained after the US reduced reciprocal tariffs on Indian goods to 18%, while India removed tariffs and non-tariff barriers on US products to zero.

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India-US Trade Deal Spurs Market Activity

The landmark trade agreement between India and the United States, featuring a reduction in reciprocal tariffs to 18% from 25%. Investors reacted positively to improved export prospects.

US President Donald Trump announced the trade deal on Monday via a post on Truth Social. The announcement followed a telephonic conversation with Prime Minister Narendra Modi.

Shortly after Trump’s announcement, PM Modi said, “Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18%. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement.”

“When two large economies and the world’s largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation.” he added.

With trade uncertainty removed, market participants are focusing on export-heavy sectors. Lower tariffs will improve order inflows, margin stability, and capacity utilisation for Indian exporters.

Sectors Likely to Benefit from Trade Deal

Export-Oriented Sectors in Focus

Export-heavy sectors are expected to benefit from improved price competitiveness and higher order visibility in the US. Analysts anticipate better order inflows, margin stability, and higher capacity utilisation.

Manufacturing segments likely to gain include IT services, pharmaceuticals, specialty chemicals, auto ancillaries, and select engineering goods. Textiles, apparel, agro and seafood exports, and consumer manufacturing with significant US exposure are also expected to benefit.

Gems and jewellery and food processing segments are projected to see a positive impact from the reduced trade barriers, according to market observers.

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Macro-Sensitive Beneficiaries

Banks and non-banking financial companies (NBFCs) are expected to benefit from an improved macro environment. A Nomura report noted that sectors previously facing high US tariffs account for 4-12% of total bank lending.

While the actual US-linked exposure is smaller, the reduced tariffs provide support to the asset quality of export-oriented portfolios, covering textiles, gems and jewellery, chemicals, engineering, food processing, and marine goods.

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Disclaimer: The above article is written for educational purposes, and the companies’ data mentioned in the article may change with respect to time. The securities quoted are exemplary and are not recommendatory.

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