Industry bodies and leaders in both India and the U.S., and across sectors, have welcomed the announcement of a deal between India and the U.S. under which tariffs on India are set to be slashed from the current 50% to 18%.
India-U.S. trade deal updates on February 3, 2026
U.S. President Donald Trump took to the social media network Truth Social late Monday night (February 2, 2026) to announce that he had spoken on the phone to his “greatest friend” Prime Minister Narendra Modi and that they had agreed to a deal to reduce India’s tariffs.
While Mr. Trump’s post also specified various other commitments made by India, Mr. Modi’s post on X regarding the call only confirmed the duty reduction, without either confirming or denying the other aspects.
Resumption of orders to India expected
“The reduction in reciprocal tariffs — from earlier levels of around 50% to 18%, as indicated — would be a major game-changer for the competitiveness of Indian exports vis-à-vis other Asian suppliers,” S.C. Ralhan, President of the Federation of Indian Export Organisations (FIEO), said.
In a significant relief for several labour-intensive sectors affected by the 50% tariffs by the U.S., Mr. Ralhan said the newly-announced duty reductions are expected to lead to an “immediate and substantial” release of orders that were earlier put on hold, particularly in sectors such as apparel, textiles, leather and footwear, where global buyers typically lock in summer season sourcing by December.
Confederation of Indian Industry (CII) President Rajiv Memani, too, said that the deal would “enhance the global competitiveness of Indian products while catalysing manufacturing growth, employment creation, and the development of resilient supply chains”.
The deal was also welcomed by industry bodies in the U.S., which noted that the announcement to reduce tariffs and non-tariff barriers would benefit both American and Indian companies and workers in both countries.
“We are optimistic that this is the first step toward a comprehensive trade agreement that will unlock even more private sector collaboration, and we look forward to reviewing the details of the deal,” U.S. Chamber of Commerce President and CEO Suzanne P. Clark said.
The electronics sector, which accounts for a large part of India-U.S. trade, is also expected to experience a “major catalyst” from the deal, according to Ashok Chandak, President of SEMI India and the India Energy Storage Alliance.
“By improving market access, enabling smoother flow of capital equipment and advanced technologies, and — when complemented by the iCET and TRUST initiatives — strengthening trusted supply chains and deepening technology collaboration, the agreement significantly enhances India’s attractiveness as a global manufacturing and innovation hub,” Mr. Chandak said.
Namit Joshi, Chairman of Pharmexcil, said that the U.S. currently accounts for 30-40% of the pharmaceutical industry’s total revenue.
“This deal fosters greater market access for Indian generics and biosimilars, strengthening India’s position as the global leader in affordable medicines,” Mr. Joshi said.
The Gem & Jewellery Export Promotion Council (GJEPC) said that the U.S. tariffs of 50% had “sharply” disrupted trade flows to US, which accounted for 31% of the sector’s exports in 2024-25.
“This [the tariff cut] is poised to revive demand and stabilise operations,” the body added.
Enhances competitiveness and predictability
Apart from industry bodies, the heads of several Indian companies reacted positively to the deal, saying it would positively impact them.
“The Aditya Birla Group is the largest Indian investor in the U.S., and we see this agreement help shape more resilient supply chains, unlock manufacturing opportunities and drive long-term economic competitiveness in both the U.S. and India,” Kumar Mangalam Birla, Chairman of the Aditya Birla Group said.
He added that the Group was committed to expanding its presence and investments in the U.S.
Sudarshan Venu, Chairman of the TVS Motor Company highlighted the fact that now India has trade deals with key economic partners around the world.
“In a challenging global environment, predictability and openness in trade help Indian industry scale, innovate and create jobs,” Mr. Venu said.
Anish Shah, Group CEO & Managing Director of the Mahindra Group said that the reduction in tariffs on Indian exports, along with the commitment to progressively lower tariff and non-tariff barriers, “will boost growth momentum and improve the predictability businesses need to invest with confidence”.
Some issues to keep in mind
According to Rahul Ahluwalia, Founder-Director of the Foundation for Economic Development, India’s tariffs will now be lower than China, and on a level playing field with competitors like Vietnam and Bangladesh,with only a few geographies such as the U.K., EU, and Japan attracting lower U.S. tariffs than India.
“However, we should not take this trade deal for granted,” Mr. Ahluwalia cautioned. “Trump has shown a great deal of unpredictability in following through. Our most urgent task should remain internal reforms that help our regulations and institutions become globally competitive.”
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Sanjaya Mariwala, Executive Chairman and Managing Director of OmniActive Health Technologies, while lauding the deal and the likely end of trade disruptions between India and the U.S., also said that it again raised some particular concerns relating to the nutraceuticals sector.
“Pharmaceuticals have had a clearer medicinal trade identity, which helped them avoid similar disruptions, while nutraceutical products have often been treated as general food items,” Mr. Mariwala said. “That difference has real consequences, from duty exposure to contract risk.”
He said that giving nutraceuticals a “more appropriate” classification framework would remove recurring uncertainty and allow the sector to grow “with the stability expected of a healthcare-linked industry”.
Published – February 03, 2026 11:44 am IST
