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Below the Perspective on the India - US trade deal by Nachiketa Sawrikar, Fund Manager, Artha Bharat Global Multiplier Fund

The India–US relationship, which many expected to strengthen during President Trump’s second term, reached a new low in June. For the world at large, strained ties between the two largest democracies were hardly good news. Against this backdrop, the new India–US trade deal, lowering the average tariff rate to about 18% from the earlier punitive 50%, marks a meaningful reset in bilateral economic relations.

For India, lower tariffs improve access to the US market for labor-intensive exports such as textiles, engineering goods, and pharmaceuticals, supporting jobs and manufacturing scale. The 18% rate brings India broadly in line with its ASEAN peers and represents the best outcome realistically achievable. For the US, the agreement creates opportunities to expand exports of energy, agricultural products, and advanced technologies, while strengthening supply-chain diversification away from over-concentrated geographies.

Beyond tariffs, the deal signals renewed strategic trust. Trade policy is being aligned with broader goals - resilient supply chains, clean energy cooperation, and technology partnerships in semiconductors and defense manufacturing. Indian consumers also stand to benefit as previously expensive US and EU luxury and high-value products become more affordable, boosting purchasing power. With the rupee having weakened nearly 5% over the past six months, improved trade flows and renewed foreign investor interest could support a partial currency recovery. As relative attractiveness shifts back toward India from ASEAN markets, a reversal of recent FII outflows could further strengthen Indian equity markets. This is a win-win news for everyone. 

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