India-U.S. Trade Deal: A New Economic Landscape

In early February 2026, India and the United States announced a significant trade agreement that will reduce tariffs on Indian exports from 25% to 18%. This announcement followed closely on the heels of India's landmark free trade agreement (FTA) with the European Union, described by European Commission President Ursula von der Leyen as "the mother of all deals." This FTA aims to create a marketplace of 2 billion people and is expected to double trade within six years. The agreements signal a shift in India's economic strategy, moving away from a historically insular approach towards deeper international trade ties.

Here's who analysts expect to gain from India’s U.S. and EU trade deals

The U.S.-India trade deal includes commitments from India to cease purchasing Russian crude oil, pivoting instead to U.S. and potentially Venezuelan oil. President Donald Trump announced that India would also commit to purchasing $500 billion in various U.S. goods, including agriculture, technology, and energy products. Analysts suggest that India's manufacturing sector, particularly in textiles and pharmaceuticals, stands to benefit significantly from the reduced tariffs, allowing it to regain competitive ground against regional rivals like Pakistan and Vietnam.

Here's who analysts expect to gain from India’s U.S. and EU trade dealsIndia-US trade deal: Congress asks government to take Parliament into confidence

The trade agreements are expected to have substantial implications for India's economy. The reduction in tariffs is anticipated to support banks, non-banking financial companies, and export-oriented manufacturers, thereby boosting retail sentiment in small and mid-cap stocks. Fitch Ratings highlighted the potential for India's pharmaceutical sector to grow significantly, projecting an increase from $31.2 billion in 2025 to $45.7 billion by 2035, driven by lower import costs and improved supply chains.

Here's who analysts expect to gain from India’s U.S. and EU trade deals

The Congress party in India has voiced strong opposition to the trade deals, demanding that the Modi government disclose the full texts of both the U.S. and EU agreements for parliamentary debate. Congress general secretary Jairam Ramesh criticized Prime Minister Modi, claiming he has "completely surrendered" to U.S. demands, which he argues could jeopardize Indian industries and farmers. Ramesh emphasized the need for transparency, particularly regarding the implications of opening India's agricultural market to U.S. products.

India-US trade deal: Congress asks government to take Parliament into confidence

While the U.S. administration has framed the trade agreements as beneficial for both nations, critics within India express concerns about the potential adverse effects on local industries and agricultural sectors. The lack of detailed public information regarding the agreements has led to calls for greater accountability from the Modi government.

India-US trade deal: Congress asks government to take Parliament into confidence

• "From the information President Trump has provided, it is abundantly clear that Prime Minister Modi has completely surrendered." — Jairam Ramesh, Congress General Secretary

India-US trade deal: Congress asks government to take Parliament into confidence

• "The agreement will also help India-based firms to diversify export destinations and open new opportunities in the large EU market." — Fitch Ratings

Here's who analysts expect to gain from India’s U.S. and EU trade deals

As the Indian Parliament continues to debate the implications of these trade agreements, the government faces pressure to clarify the terms and potential impacts on domestic industries. The ongoing discussions may shape India's economic landscape and its relationships with both the U.S. and the EU in the coming years.

India-US trade deal: Congress asks government to take Parliament into confidence