India–US Trade Deal Lowers Tariffs, Lifts ‘Made in India’ Exports

A fresh trade understanding between India and the United States is set to reshape market access for Indian manufacturers, with New Delhi positioning the agreement as a clear boost to the government’s ‘Made in India’ initiative.

At the centre of the announcement is a reduction in reciprocal tariffs on Indian goods entering the US, now lowered to 18%, down from 25%. Finance Minister Nirmala Sitharaman welcomed the move, calling it a positive signal for Indian producers competing in global markets.

Good news for #MadeInIndia products. They will now face reduced tariff of 18%.

Thanking the leadership of PM @narendramodi and @POTUS for this development.
People of our two large democracies stand to benefit. #IndiaUSRelations

— Nirmala Sitharaman (@nsitharaman) February 3, 2026

A Deal Shaped at the Top

The breakthrough followed a high-level phone call between Prime Minister Narendra Modi and US President Donald Trump, underscoring the political weight behind the agreement.

Modi described the tariff reduction as a win for Indian industry, noting that closer cooperation between the world’s largest democracies unlocks long-term economic opportunity.

“Wonderful to speak with my dear friend President Trump today. Delighted that Made-in-India products will now have a reduced tariff of 18%,” Modi said, adding that such partnerships benefit people on both sides.

Trump, for his part, said the United States had agreed to reduce reciprocal tariffs on Indian goods “out of friendship and respect” for Modi, confirming that the cut would take effect immediately.

Reciprocity at the Core

The agreement is not one-sided. In return, India has committed to reducing trade and non-tariff barriers for American goods and significantly increasing imports across energy, technology, and agriculture.

According to Trump, New Delhi will move towards reducing tariffs against US products to zero and will purchase American goods at a much higher level, including over $500 billion worth of energy, technology, agricultural products, coal, and other items.

This reciprocal framework reflects a broader recalibration in trade relations, following a year marked by friction and policy uncertainty between the two countries.

Markets Reactions

Financial markets responded swiftly to the announcement. Indian equities saw a sharp rally, with the Sensex jumping over 3,500 points and the Nifty 50 rising nearly 5%, according to reports. The rupee also strengthened, gaining more than 1% to open near 90.40 against the US dollar.

The surge reflects investor optimism that lower tariffs and improved access to the US market could support export-led growth, particularly for manufacturing-led enterprises aligned with the Made in India programme.

Beyond Tariffs: Strategic Implications

Beyond trade volumes, the deal signals a broader strategic alignment. It marks a pause in tensions after months of uncertainty and places manufacturing, energy, and technology cooperation back at the centre of India–US relations.

The agreement also includes a commitment from India to halt oil purchases from Russia, adding a geopolitical dimension to what is otherwise being framed as an economic reset.

For Indian enterprises, especially exporters and manufacturers, the reduced tariff regime could improve competitiveness in the US market. For American firms, lower barriers and expanded imports open new avenues in India’s growing economy.

While the announcement has been welcomed at the highest political levels, its long-term impact will depend on how quickly commitments on both sides translate into operational changes on the ground.

For now, the deal reinforces the government’s message that Made in India is not just a domestic manufacturing slogan but a global trade strategy, one increasingly tied to diplomatic alignment and reciprocal market access.