Indian exporters on February 3rd expressed strong support for US President Donald Trump's announcement of a new trade agreement between the two countries.

Indian exporters on February 3rd expressed strong support for US President Donald Trump's announcement of a new trade agreement between the two countries, ending months of market volatility. However, analysts still cautioned against the lack of clarity in the detailed terms.

According to a statement by US President Donald Trump, the agreement was reached after Indian Prime Minister Narendra Modi pledged to stop buying oil from Russia amid the ongoing conflict in Ukraine. In return, the US will reduce tariffs on Indian goods from 25% to 18%. A White House official confirmed to AFP that the additional 25% punitive tariff related to India's purchase of Russian oil was also waived.

The Indian government has also agreed to purchase over $500 billion worth of US goods, including energy, technology, agricultural products, coal, and other commodities. This positive news immediately impacted financial markets, pushing the Nifty Index in Mumbai up nearly 5% at the opening of trading on February 3 (local time).

The Federation of Indian Export Organizations (FIEO) has hailed this as "the greatest deal ever" and predicts a rapid surge in orders. FIEO Director-General Ajay Sahai stated that Indian exporters are now on equal footing with their Southeast Asian and South Asian counterparts, where tariffs are typically above 19%. Sahai also noted that garment and footwear manufacturers, whose summer orders were delayed due to high tariffs, will find immediate relief.

Previously, the lack of a trade agreement had worried investors throughout 2025, leading to a more than $20 billion outflow of foreign capital from the Indian market and putting significant pressure on the rupee. While smartphones and generic drugs were exempt from the initial tariffs, labor-intensive industries such as seafood, gemstones, and jewelry suffered heavily. The Indian Seafood Exporters Association estimated that Trump's previous 50% tariffs had caused a 15% drop in exports to the US between April and November 2025.

Despite business optimism, analysts remain cautious about the lack of clarity in the agreement, particularly Trump's statement that India would move toward reducing import tariffs on US goods to "zero." Previous negotiations have frequently stalled due to India's insistence on not opening up its agricultural sector, a politically sensitive issue, to greater access for US goods.

Economist Biswajit Dhar expressed concern about signals indicating that the US is seeking access to the Indian agricultural market. Furthermore, the commitment to purchase $500 billion worth of US goods is also causing controversy.

Ajay Srivastava of the Global Trade Research Initiative (GTRI) think India currently imports less than $50 billion worth of goods annually from the US. The $500 billion figure sounds more like an ambition than a realistic commitment. Until a joint statement and a concrete negotiating document are issued, this should be seen as a political signal rather than a final agreement.

Source: VTV

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