India and the United States announced a historic trade deal last night, with a massive reduction in tariffs on India from the earlier 50 per cent to 18 per cent. The new India-US trade deal would be a major game-changer for the competitiveness of Indian exports of ‘made in India’ goods. It will boost the country’s manufacturing sector as it expands its global market access with a lower tariff burden.
Under the India-US trade deal, sectors such as engineering goods, pharmaceuticals, chemicals, leather products, gems, and agricultural products are expected to benefit significantly.
The deal is likely to lead to an immediate and extensive release of pending orders that were earlier put on hold, predominantly in labour-intensive sectors like apparel, jewellery, and footwear.
The tariff rationalisation is expected to push these sectors with strong acceleration in export growth in the coming months. Lower tariffs will not only improve price competitiveness but also help Indian exporters fit in and expand into the supply chain network of the United States.
As per the Federation of Indian Export Organisations (FIEO), the India-US trade agreement reflects the strengthening strategic and economic ties between India and the United States and opens vast opportunities for Indian exporters, particularly MSMEs. SC Ralhan, President, FIEO, said that the deal would improve the competitiveness of Indian products in the US market and provide a strong impetus to India’s export growth across sectors. This agreement will encourage capacity expansion, attract fresh investments, and support job creation in export-oriented industries, he added.
“This agreement sends a strong signal to global markets about India’s commitment to free, fair, and rules-based trade. FIEO remains confident that this development will help India achieve its long-term export targets and further strengthen India’s position as a reliable global trading partner,” Ralhan noted.
This historic announcement brings an end to the 11-month-long uncertainty that had adversely affected the bilateral trade relations between the two countries.