India-US Trade Deal to Create More Opportunities for Manufacturing Sectors, Says Revenue Secretary

US President Donald Trump announced the US-India trade deal, pledging to reduce reciprocal tariffs on imports of Indian goods to 18% from 25%, ending the long-standing uncertainty.

Commenting on how the India-US deal could impact trade the two countries, Arvind Shrivastava, Secretary, Department of Revenue, Ministry of Finance, Government of India, said, “India-US trade deal will further expand and deepen trade between two of the largest economies of the World. It will create more opportunities for our labour-intensive and manufacturing sectors in the US market and give impetus to mutually-beneficial collaboration in high and advanced technology sectors.”

Announcing the trade deal on the social media platform Truth Social, Trump stated that India will move to reduce tariff and non-tariff barriers against the United States to ‘zero’. In addition, he claimed that Prime Minister Narendra Modi had “agreed to stop buying Russian oil and buy much more from the United States, and potentially Venezuela.”

India has yet to declare the full details of the agreement.

Outlining that the US is India’s largest export destination accounting for about 20% of total exports, a report published by JM Financial Institutional Securities stated that the lower tariff should improve bilateral trade flows and help revive India’s trade surplus with the US.

"Improved dollar inflows could support India’s balance of payments and contribute to INR appreciation while also acting as a sentiment boost for Indian equity markets," the report added.

The report further issued caution by recounting how the US–Korea FTA showed initial optimism but were diluted by ‘later’ safeguards and reinterpretations. Similarly, it warned that the recent tariff threats linked to Greenland-related geopolitical tensions underscore how strategic considerations can quickly reshape trade outcomes.

Commenting on the development, Sunil Bharti Mittal, Founder & Chairman, Bharti Enterprises, said that India–US trade deal is a "much awaited and a significant milestone" for both the nations that could unlock immense opportunities for investments and growth.

"The flurry of FTA’s is an affirmation of India’s role at the centre of global frameworks, aimed at building resilient international trade patterns," he asserted.

Echoing a similar stance, Naveen Aggarwal, Office Managing Partner – Delhi-NCR and US-India Corridor Leader, KPMG in India, said that the announcement to reduce punitive tariffs on Indian exports to the US, along with the anticipated Bilateral Trade Agreement, represents a pivotal development with the potential to significantly accelerate India’s 2047 ambitions.

Commenting on future projections, he added, "The tariff reductions are expected to unlock substantial benefits for critical labour‑intensive sectors such as textiles, handicrafts, leather and footwear, and gems and jewellery, further complementing the favourable policy measures announced in Budget 2026." He believes that these sectors, coupled with the forthcoming FTAs with the United Kingdom and the European Union, could benefit from multi‑year structural tailwinds.

Trade Deal Announced

US President had announced the deal on social media platform Truth Social on February 2 following a call with Indian Prime Minister Narendra Modi.

"Out of friendship and respect for Prime Minister Modi and, as per his request, effective immediately, we agreed to a Trade Deal between the United States and India, whereby the United States will charge a reduced Reciprocal Tariff lowering it from 25% to 18%. They will likewise move forward to reduce their tariffs and non-tariff barriers against the United States to zero," Trump stated in a post on Truth Social.

Prime Minister Narendra Modi too acknowledged the development a few minutes later in a post on X, "Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff to 18%. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement."

This comes a day after Finance Minister Nirmala Sitharaman presented the Union Budget, announcing several measures that could benefit American companies.