Market Performance
The finalisation of the India-US trade deal has quietly shifted the market narrative over the past few sessions. What was earlier a cloud of uncertainty hanging over growth, exports, and policy signals has now started to clear.
Markets are reacting less to speculation and more to clarity. With trade risks easing, the focus has moved back to domestic growth strength, liquidity conditions, and how long supportive policies really need to stay in place.
This reset matters. Because when uncertainty fades, policy decisions tend to slow down too.
Main News: India-US Trade Deal Changes the Macro Equation
The India-US trade deal has removed one of the biggest external risks facing India’s economy.
With the agreement now in place, the momentum seen in high-frequency economic indicators can continue without disruption from trade-related shocks. Growth visibility has improved, and that changes how policymakers view the need for further support.
The key outcome is simple: stronger growth certainty reduces the urgency for additional policy easing.
As a result, the upcoming monetary policy review is likely to see a pause rather than fresh action, with policymakers choosing stability over stimulus.
So far, the central bank has already reduced the repo rate by 125 basis points, bringing it down to 5.25% from last year’s peak. With growth signals holding firm, the current phase appears more about maintaining balance than pushing rates lower.
Company & Policy Context: Why the Trade Deal Matters?
The India-US trade deal isn’t just about tariffs. It reshapes trade flows, costs, and competitiveness.
Key developments from the deal:
- Tariff penalties imposed since August 2025 have been rolled back
- Earlier tariffs of 25% + 25% have been reduced to a cumulative 18%
- India will shift crude oil sourcing away from Russia
- Increased crude purchases from the US and Venezuela
- Lower tariffs on Indian exports to the US
This has both economic and geopolitical implications.
For exporters, the math improves immediately.
Earlier, once sector-specific duties were added, effective tariff levels had climbed to 30–35%. Now, even with Section 232 duties on steel, aluminium, and automobiles still in place, effective tariffs are estimated to fall sharply.
Tariff impact at a glance:
- Headline tariff rate: 18%
- Estimated effective tariff rate: 12–13%
- Earlier effective rate: 30–35%
That difference is meaningful.
Export Sectors Get Breathing Room
Lower effective tariffs improve export economics across key labour-intensive industries.
Sectors likely to benefit the most:
- Gems and jewellery
- Textiles
- Agricultural products
- Engineering goods
With costs easing and competitiveness improving, export-side pressure on growth reduces. This strengthens the external sector and improves overall macro stability.
That stability feeds directly into policy thinking.
Growth Signals Strengthen Policy Confidence
The trade deal removes a major overhang that had been weighing on long-term projections.
India’s GDP growth trajectory now has fewer downside risks tied to global trade disruptions. Export certainty, better tariff positioning, and steadier external balances all support the broader growth framework.
High-frequency indicators were already showing resilience. The trade agreement adds another layer of support—without requiring additional stimulus.
Summary: What the India-US Trade Deal Changes?
- Growth visibility improves
- Trade-related uncertainty reduces
- Export competitiveness strengthens
- Effective tariffs fall from 30–35% to 12–13%
- Repo rate already eased by 125 bps to 5.25%
- Policy focus shifts from easing to maintaining balance
In effect, the India-US trade deal acts as a stabiliser.
It doesn’t force immediate changes. Instead, it quietly changes the backdrop—making patience more valuable than urgency. With one of the biggest external risks now resolved, the policy environment enters a more measured phase, anchored by clarity rather than caution.
Source: Livemint
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