NEW DELHI: US President Donald Trump’s move to slash tariffs on Indian imports sparked a relief rally across Indian markets on Tuesday, lifting sentiment among exporters and policymakers even as details of the agreement remained scarce.
Trump announced a trade deal with India on Monday to cut tariffs on Indian goods to 18% from 50% in exchange for New Delhi halting purchases of Russian oil and lowering trade barriers.
However, Trump’s social media post announcing the agreement was not followed by any detailed statement from either the White House or the Indian government.
An Indian government official said India has agreed to buy more petroleum, defence goods and aircraft from the United States, while partially opening its tightly guarded agriculture sector under the deal. New Delhi has also lowered tariffs on imported cars to address Washington’s immediate demands, the official said.
Trump said India would buy more American goods, with purchases rising to more than $500 billion, including energy, coal, technology and agricultural products, though he did not specify a timeframe.
“India’s tariff agreement with the US removes its earlier disadvantage versus peers”, said Neelkanth Mishra, chief economist at Axis Bank. He said the deal would benefit sectors such as gems and jewellery, leather, plastics, ceramics, auto components and non-technology foreign investment.
Among Asian peers, US tariffs on goods from Indonesia stand at 19%, while rates for Vietnam and Bangladesh are 20%.
India’s exports to the United States rose 15.88% year on year to $85.5 billion during January–November, while imports stood at $46.08 billion, Indian government data showed.
The announcement reduced global uncertainty, India’s economic affairs secretary Anuradha Thakur said at an event in New Delhi. Investor sentiment also improved, with India’s benchmark Nifty 50 index rising nearly 3% and the rupee strengthening more than 1% to 90.40 per dollar in early trade.
All Indian goods shipped to the United States will now face an 18% tariff, down from 50%.
“Lower tariffs will not only improve price competitiveness but also help Indian exporters integrate more deeply into US supply chains”, said S C Ralhan, president of the Federation of Indian Export Organisations.
Moody’s Ratings said a reduction in US tariffs on most Indian goods would reinvigorate India’s exports to the United States. — Reuters
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