India: Tariff reset and sector winners – DBS

DBS Group Research’s Radhika Rao explains that the US and India have agreed a trade deal cutting reciprocal tariffs to 18%, with the final rate contingent on India continuing to reduce Oil imports from Russia. The move aligns India’s tariff levels closer to ASEAN peers and is expected to benefit sectors like textiles, gems, engineering goods, leather and chemicals.

US–India deal reshapes trade landscape

"US President Trump announced overnight that US and India had agreed on a trade deal, under which reciprocal tariffs on India will be lowered to 18% from 25% earlier."

"There was no explicit mention of how the additional punitive tariff of 25% (due to Russian oil purchases) will be treated, although US Ambassador to India Sergia Gor said in press comments, that the final tariff rate will stand at 18% (vs 50% earlier)."

"This was contingent on the country continuing to cut back on oil purchases from Russia."

"US President's social media post also indicated that India had agreed to reduce its tariffs and non-tariff barriers, while making commitments to step up purchases from the US to “over $500bn” of energy, technology, agricultural, and coal supplies etc, without alluding to any timeline."

"In return, India’s PM Modi said, on his social media handle, that “Made in India” products will now have a reduced tariff of 18%. This effectively takes India’s tariff close to most of the ASEAN countries and puts it at an advantageous position vs China."

"Textiles, gems & jewellery, engineering goods, leather and chemicals are likely amongst the key gainers."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)