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India-US trade deal complements India's manufacturing push under the PLI schemes, supports export diversification, and advances its goal of moving up the global value chain, says a report by Axis Direct. For the US, India represents a large and dependable market, as well as a strategic manufacturing alternative in key sectors.
The report noted that for Indian markets, "the deal aligns well with its manufacturing push (PLI schemes), export diversification strategy, and ambition to move up the global value chain. For the US, India offers a large, reliable market and a strategic manufacturing alternative in critical sectors." Talking about the growth trajectory, "The trade deal is structurally positive for India's medium-term growth and external stability. Improved market access and tariff certainty are likely to boost exports, support manufacturing investment, and strengthen inflows of foreign direct investment (FDI)." The report also outlines that "the US-India trade deal is particularly positive for export-oriented sectors with meaningful exposure to the US market. Sectors such as textiles, chemicals, pharmaceuticals, auto ancillaries, IT services and select industrials stand to benefit from improved market access, tariff rationalisation and greater supply-chain certainty." From the investment point of view, the India-US trade deal should be seen as a medium-term structural positive rather than a short-term trigger. The report also highlights that "sustained execution could meaningfully enhance India's export competitiveness, manufacturing depth, and global integration." Investors should also focus on companies with strong US exposure, scalable manufacturing capabilities, regulatory compliance strength, and balance-sheet resilience to fully capture the opportunity, says the report. For equity markets, the deal enhances earnings visibility, supports valuation re-rating--particularly for export-oriented and capex-linked sectors--and reinforces India's positioning as a relatively safe haven among emerging markets. Talking about India-US trade relations, the report suggests that both countries are entering 'a constructive phase' after a period marked by tariff disputes, regulatory frictions, and global supply-chain realignments. "With both economies seeking to de-risk supply chains, counter China-centric dependencies, and deepen strategic ties, the proposed US-India trade deal is shaping up as a pivotal catalyst," the report highlights. On Tuesday, the much-awaited India-US trade deal came into effect, where the US reduced the reciprocal tariff on Indian goods to 18 per cent from the earlier 50 per cent. Overall, "The trade deal is structurally positive for India's medium-term growth and external stability. Improved market access and tariff certainty are likely to boost exports, support manufacturing investment, and strengthen inflows of foreign direct investment (FDI). Over time, this should help narrow the current account deficit, stabilise the rupee, and reduce India's vulnerability to global shocks," the report concludes. (ANI)
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