New Delhi, February 3, 2026 — Indian markets surged and industry leaders celebrated on Tuesday after U.S. President Donald Trump announced a landmark trade agreement with India, slashing tariffs on Indian goods from 50% to 18% and ending months of uncertainty for exporters.
The deal, announced Monday following a phone conversation between Trump and Prime Minister Narendra Modi, marks a significant shift in bilateral trade relations. Trump stated that Modi had agreed to stop purchasing Russian oil, a key condition that led to the tariff reduction.
"Delighted that Made in India products will now have a reduced tariff of 18%," Modi said, thanking Trump. "When two large economies and the world's largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation."
Markets React Sharply
Stock market benchmark indices Sensex and Nifty jumped nearly 3% during Tuesday's afternoon session, while the rupee rallied against the dollar. Textile, leather, gems and jewellery, seafood exports and specialty chemicals stocks led the gains, with some companies seeing shares surge up to 20%.
The 10-year government bond yield softened from around 6.77% to approximately 6.71%, reflecting renewed investor confidence in Indian sovereign debt.
Industry Welcomes Relief
Business leaders across sectors praised the agreement as a crucial boost to India's export competitiveness and manufacturing ambitions.
"This is a much-awaited and significant milestone for both nations, unlocking immense opportunities for investments and growth," said Sunil Bharti Mittal, Founder and Chairman of Bharti Enterprises.
The Indian Leather Products Association called the tariff reduction "a visionary deal" that fundamentally changes the competitive landscape. "Indian exporters had been operating under a severe tariff disadvantage for years," said ILPA president Mohamad Azhar.
Revenue Secretary Arvind Shrivastava said the deal would "further expand and deepen trade between two of the largest economies of the world" and create opportunities for labor-intensive and manufacturing sectors in the American market.
Political Response Mixed
While NDA coalition members congratulated Modi at a parliamentary party meeting, calling it a "big decision" that would benefit the entire country, opposition parties raised concerns.
Congress leader Rahul Gandhi claimed Modi had been "compromised" and "sold out" the hard work of Indian farmers. The Congress party demanded the government table the full text of the agreement in Parliament for debate.
Samajwadi Party president Akhilesh Yadav criticized the deal, claiming that opening Indian markets to American agricultural produce amounted to "betrayal" of the nearly 70% of India's population dependent on farming.
Russian Response
Kremlin spokesman Dmitry Peskov said Tuesday that Russia had not received any official statement from India about halting oil purchases, though he added that Moscow intends to continue developing relations with India "in every possible way."
Some Sectors Still Face Challenges
Not all industries will benefit equally. The Aluminium Extrusion Manufacturers' Association of India noted that aluminum, iron and steel product exports will continue facing higher 50% duties under separate Section 232 tariffs implemented in June 2025.
Exporters and experts are now awaiting the U.S. executive order for clearer details on the agreement's implementation.
Commerce and Industry Minister Piyush Goyal is expected to make a statement in Parliament on Tuesday regarding the trade deal.
Economic Affairs Secretary Anuradha Thakur said the announcement has "reduced a great deal of global uncertainty" while affirming India's commitment to fiscal discipline without compromising developmental priorities.
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