India & US Strike long-delayed trade deal: Highlights

 

India & US Strike long-delayed trade deal: Highlights - US Cut Tariffs On Indian Import To 18%

In a major diplomatic breakthrough on February 2–3, 2026, India and the United States officially sealed a long-delayed trade agreement. The deal, announced following a high-level phone call between Prime Minister Narendra Modi and President Donald Trump, marks a significant de-escalation of the trade tensions that had peaked in late 2025.

US President Donald Trump's decision to lower reciprocal tariffs on India from 50% to 18% has been met with a sense of relief in Asia's third-largest economy

​Key Provisions of the Deal:

​The agreement is built on a "reciprocity" framework, addressing both tariff relief and massive purchase commitments:

​Tariff Reductions: The U.S. has reduced the reciprocal tariff on "Made in India" goods to 18%, down from the previous base of 25% (and an effective 50% when including prior penalties).

​Removal of Oil Penalties: Washington agreed to drop the additional 25% punitive tariff that had been imposed on India for its purchase of Russian crude oil.

​Market Access for U.S. Goods: In exchange, India has committed to reducing its own tariffs and non-tariff barriers on American products toward zero.

​Massive Purchase Commitment: India has pledged to buy over $500 billion worth of U.S. products across several sectors, including:

​Energy: Natural gas, coal, and crude oil (with a pivot away from Russian supplies).

​Technology & Defense: High-tech hardware and nuclear equipment.

​Agriculture: Pulses, dairy, and processed foods.

​Strategic & Economic Impact

​1. Competitive Edge Over Regional Rivals

​The 18% tariff rate gives India a distinct advantage over its competitors in South and Southeast Asia. Currently, countries like Vietnam (20%), Bangladesh (20%), and Indonesia (19%) face higher levies, while China remains at a much higher 34%.

​2. Boost for Indian "Make in India" Sectors

​Lowered tariffs are expected to provide immediate relief to export-heavy sectors that were struggling under high duties:

​Textiles and Apparel: Making Indian garments more price-competitive in the U.S. market.

​Gems and Jewelry: Restoring margins for one of India's largest export categories.

​Engineering & Auto Parts: Enhancing India's role in the "China Plus One" supply chain strategy.

​3. Energy Shift

​A pivotal condition of the deal is India’s agreement to cease purchases of Russian oil and instead source energy from the U.S. and potentially Venezuela. This aligns India more closely with U.S. geopolitical objectives regarding the Russia-Ukraine conflict.

​Current Status & Next Steps

​While the deal has been "sealed" in principle and hailed by both leaders, political observers in India are closely watching the details of the $500 billion commitment.

Analyzing the impact of the February 2026 India-US trade deal reveals a significant shift in both the financial markets and the consumer technology landscape. While the deal is a massive win for stock sentiment, its effect on your wallet for gadgets like laptops is a bit more nuanced.

​1. Impact on the Indian Stock Market
​The market's reaction has been overwhelmingly positive, primarily because the deal removes the "tariff overhang" that suppressed Indian equities throughout 2025.
​Key Sector Winners

​IT Services (The Biggest Gainers): Even though IT services aren't usually hit by physical tariffs, the deal provides macro-predictability. Shares of giants like Infosys, TCS, and Wipro surged 4-6% immediately. Analysts view this as a "sentiment reset" that could reverse the foreign investor outflows seen last year.
​Electronics Manufacturing Services (EMS): Local players like Dixon Technologies and Kaynes Technology are seeing a boost. As India becomes a more attractive "China + 1" alternative with lower reciprocal tariffs (now at 18%), these companies are expected to scale up exports to the US.
​Energy & Defense: With India committing to "Buy American" for over $500 billion in energy and defense products, PSU stocks and private players in these supply chains are poised for long-term growth.
​2. Impact on Retail Prices (Laptops & Gadgets)

​If you’re planning to buy a MacBook, a Dell laptop, or the next high-end smartphone, the impact is a mix of policy relief and global cost pressures.
​Why Prices Might Drop (or Stabilize)
​Zero Import Barriers: India has agreed to reduce tariffs on US-made goods toward zero. This is direct downward pressure on the retail price of American-branded tech that is imported or uses major US-sourced components.
​Rupee Recovery: The trade deal has helped the Indian Rupee recover ground against the Dollar. Since most electronics components are traded in USD, a stronger Rupee makes importing these parts cheaper for manufacturers, which can lead to lower retail prices.
​The "But": Global Counter-Factors
​Component Costs: Despite the trade deal, global prices for memory chips (DRAM/NAND) have been rising due to massive demand from AI data centers.
​Premiumization Trend: 2026 market data suggests Indian consumers are "trading up" to higher-end models. While base prices might stabilize, the "average" price you pay might feel higher because brands are focusing on AI-integrated, premium hardware.

Summary:

Category Impact Outlook for 2026

Market           vs.        Pocket

IT Stocks 🚀 High Positive Higher valuations due to policy certainty.
Laptops (US Brands) 📉 Slightly Lower Potential price cuts as India reduces import barriers.
Smartphones ↔️ Stable Local manufacturing (PLI scheme) offsets global chip price hikes.
FII Inflow 📈 Increasing Foreign investors returning to Indian equities.