The recent trade agreement between India and the U.S. is a big deal. Tariffs on Indian exports will drop from 25% to 18%. This news comes shortly after India signed a significant free trade agreement with the EU, which has been called “the mother of all deals.”
In a post on TruthSocial, Trump announced that India will stop buying Russian crude oil. Instead, it will shift towards U.S. oil and possibly oil from Venezuela. India is also pledging to purchase $500 billion worth of products from the U.S., including agriculture, tech, and energy.
Experts believe that India’s manufacturing sector is set to benefit the most. James Thom, an investment director at Aberdeen Investments, noted that smaller and medium companies could thrive under the new tariff rates, which are more competitive compared to those in countries like Pakistan, Vietnam, and Bangladesh.
Market sentiment has improved significantly. A.J. Bell’s Russ Mould pointed out that the Sensex, a stock index in India, rose by 2.5% following the announcement. This suggests that investors are optimistic about the changes. Mould added that while India has been a strong performer for investors, Trump’s previous tariffs had stalled momentum. Now, there’s hope that the new agreement could bring renewed vitality to the market.
Analysts from Bernstein highlighted that improved U.S.-India relations could lead to fewer regulatory hurdles for Indian IT companies, reducing the risk of additional taxes. This should benefit the sector greatly, even if the deal focuses primarily on manufactured goods.
In the backdrop, the agreement with the EU has also set the stage for India’s future growth. The elimination of tariffs on important drugs is expected to grow India’s pharmaceutical market significantly in the next decade. BMI Research forecasts that the market could expand from $31.2 billion in 2025 to $45.7 billion by 2035, with a steady annual growth rate of 5.2%.
As this trade landscape shifts, India may find new export opportunities while establishing itself more firmly in the global market. The collaboration signals a growing bond between the two nations, which could benefit both economies in the long run.
For more detailed insights, check out the U.S. Trade Representative for recent statistics and updates on trade agreements.
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