India-US trade deal: Certainty after prolonged suspense

Raju Korti
The heart of the deal is simple. The United States cuts its tariff on Indian goods to 18 per cent from 25 per cent. India, in turn, lowers tariffs and non-tariff barriers on American goods to near zero in selected areas. India also commits to buying more American energy, farm products, technology and coal. A major irritant linked to Russian oil has been eased.

(Pic representational)

Both sides can claim a win. India gains immediate relief for its exporters. Sectors like textiles, engineering goods, chemicals and light manufacturing become more competitive in the US market. This matters at a time when global demand is weak and margins are thin.

The United States gains wider access to the Indian market. American energy firms, agri exporters and technology companies benefit. The deal also pushes India to reduce dependence on Russian oil, which aligns with Washington’s larger geopolitical goal.

In the short term, some Indian producers who face American competition may feel pressure. On the US side, domestic lobbies that dislike tariff cuts will grumble. But no major group takes a direct hit.

For India, the biggest gain is certainty. Exporters now know the tariff they face. That helps planning and pricing. The deal also signals that India is no longer stuck in trade disputes but is willing to cut deals with large partners.

Another gain is timing. This comes just after the agreement with the European Union. Together, these deals place India more firmly in global supply chains.

The US secures a stronger economic partnership with India. It also nudges India away from Russian oil without public confrontation. American exporters gain access to a large and growing market. Politically, Washington shows it can still strike bilateral deals that serve strategic goals.

The biggest irritant was energy. India’s purchase of Russian oil had drawn sharp US tariffs. This was the real tug of war. India blinked first here, though softly. It did not abandon energy security. It agreed to diversify supplies over time. The US responded by removing the extra penalty and cutting the base tariff.

Other irritants like digital taxes and market access have not vanished. They have been parked for later rounds. That itself is progress.

For the Indian economy, the effect will be gradual. Exports should get a lift. Investor confidence improves. The signal matters more than the exact tariff cut.

For stock markets, sentiment is the key word. Indian markets have been volatile for months. This deal reduces one big uncertainty. That is why futures reacted sharply. It does not guarantee a bull run, but it creates a firmer floor.

Export oriented stocks, energy logistics and manufacturing could benefit first. The wider market will follow only if earnings improve.

This deal is not the end. It is a base camp. More negotiations will follow on services, digital trade and deeper tariff cuts. If managed well, this could lead to a broader economic partnership rather than a narrow trade pact.

And for a piddly investor like me, who puts in two peanuts hoping for half a peanut, the lesson is simple. Big deals do not make you rich overnight. But they quietly improve the odds. In the stock market, that itself is no small comfort.