India-US Trade Deal To Attract FIIs, Support Exports And Boost Economy

Industry experts have welcomed the U.S.-India trade deal, terming it a major positive for Indian markets and export-oriented sectors, and said the move could revive foreign investor interest and strengthen macroeconomic indicators.
Divam Sharma, Co-Founder and Fund Manager at Green Portfolio PMS, said the agreement has come at a crucial time for the markets.

"The India-US trade deal is a massive positive, arriving just when we needed it most after a budget that prioritized tactics over populism," he said.

Sharma added that with valuations corrected and fundamentals remaining strong, the deal could attract foreign institutional investors (FIIs) back to Indian equities in the near term.

"A large chunk of US FII capital will likely shift here, viewing India as the premier strategic play among emerging markets. The current high pessimism will get trapped in a sharp rally fueled by short covering," he said, adding that domestic institutional investors (DIIs) and retail investors are also expected to participate, amplifying market flows.

Highlighting sectoral impact, Sharma said, “Key sectors that can benefit include textiles and apparel, auto ancillaries and engineering, specialty chemicals, agro and seafood exports, and select electronics and consumer manufacturers with US exposure.”

He noted that this aligns with the Budget's focus on exports, manufacturing, and deeper integration into global supply chains.

Deepak Agrawal, CIO-Debt at Kotak Mutual Fund, said the reduction in tariffs on Indian exports is a welcome move. "This development is likely to improve the country's balance of payments gap, strengthen the rupee, and increase foreign exchange reserves," he said.

Agrawal added that the move could also attract FIIs who had been waiting on the sidelines, noting that "Indian equities have become more attractive as their valuation premium has narrowed over the past year." He further said the positive macro outlook is expected to keep interest rates stable.

Colin Shah, Managing Director of Kama Jewelry, said the reduction of reciprocal tariffs to 18 per cent has brought relief to the gems and jewellery sector.

"The USA has been a prominent consumer market of Indian gems and jewellery, and sentiment had taken a hit due to tariff implications," he said. “This partial relaxation will reinstate confidence in Indian jewellery manufacturers, exporters, and buyers in the American market.”

Garima Kapoor, Deputy Head of Research and Economist at Elara Capital, said, “Our estimates indicate policy-implied effective tariff rate on India post deal is at 14.1 per cent if Russia-related tariffs are removed.”

She added that "the 18 per cent tariff brings the rate in line with India's peers that have around 20 per cent rates," calling the development “immensely positive for every Indian asset class.”

Following the announcement by US President Donald Trump and PM Narendra Modi on February 2, 2026, the reciprocal tariff by the US was reduced to 18 per cent from 25 per cent, while the additional 25 per cent punitive levy linked to India's purchase of Russian oil has been removed. 

Also Read: Handshakes To High-Stakes: From India-US Trade Deal To EU FTA- List Of India's Landmark Agreements