India’s stock market jumped sharply on Tuesday morning after New Delhi and Washington finalized a major trade deal that immediately reduced U.S. tariffs on Indian goods. The benchmark Nifty 50 index opened 5% higher, reflecting the strongest market reaction seen in months.
The move came after U.S. President Donald Trump announced that American tariffs on Indian products would drop to 18%, down from the previous 50% rate. India, in return, agreed to eliminate many of its trade barriers and stop purchasing Russian oil, shifting instead toward U.S. and Venezuelan supplies.
Prime Minister Narendra Modi celebrated the announcement on X, saying Indian-made products would now enjoy lower tariffs in the U.S., opening the door for stronger economic ties. He also thanked Trump and said the agreement would support peace, stability, and prosperity worldwide.
Analysts say the agreement arrived at a crucial time. Earlier this year, investors were frustrated by the absence of a clear U.S.–India trade framework, despite strong expectations that India would be one of the first countries to sign a deal in 2025.
Citi Research noted that the mismatch between India’s strong economic fundamentals and sluggish market performance had created uncertainty. The new tariff cuts, they said, are “materially better than expectations.”
Trideep Bhattacharya of Edelweiss Asset Management added that, when combined with India’s recent trade pact with the European Union, the deal could become a powerful engine for India’s growth in 2026.
The news boosted U.S.-listed Indian companies as well. Infosys rose more than 4%, Wipro jumped nearly 7%, HDFC Bank gained over 4%, and the MSCI India ETF climbed 3%.
Trump said India would increase its purchases of American products, including more than $500 billion worth of energy, technology, and agricultural goods. India also pledged to reduce tariffs and non-tariff barriers on U.S. exports to zero.
Despite the excitement, key details are still missing. The White House has yet to issue the formal documents needed to activate the tariff changes. There is also no timeline for when India must fully stop buying Russian oil—a shift that experts say will be difficult and expensive.
Russia currently supplies a large share of India’s oil needs. While Venezuela produces oil of similar quality, its infrastructure has been neglected for decades and will require massive investment to scale up production.
Economists warn that replacing Russian oil entirely could take years, not months. Still, India has already begun reducing its imports, partly because the price gap between Russian and non-sanctioned oil has narrowed.
Until last year, India had some of the highest tariffs in the world. Trump’s previous increases pushed effective U.S. tariffs on Indian products close to 35%. The new 18% rate brings India closer to tariff levels seen in other major Asian economies.
U.S. business groups offered cautious approval. The U.S. Chamber of Commerce said the announcement was a step toward a broader trade agreement, while some small-business coalitions warned that higher tariffs could raise costs for American companies.
For India, the deal arrives at a moment of major economic momentum. It recently signed a sweeping agreement with the European Union that will reduce tariffs on nearly 97% of traded goods.
Indian markets have struggled since the U.S. raised tariffs last year, with heavy foreign investor outflows making India one of the worst-performing emerging markets of 2025. The new deal may reverse that trend.
Trade Minister Piyush Goyal said the agreement opens “unprecedented opportunities” for Indian workers, manufacturers, and exporters. He also emphasized that the partnership would boost innovation and help India gain access to advanced U.S. technologies.
With two major trade deals signed within weeks, India is entering 2026 with renewed global support—and investors clearly took notice. Tuesday’s market surge suggests confidence is returning fast, and more stability may be on the way as details of the U.S.–India agreement become official.
If you find my content helpful, consider buying me a coffee to show your appreciation and help me continue creating.
Buy Me a Coffee