EXCLUSIVE | India-US Trade Deal Impact: "Markets will take it positively", says market expert Sunil Subramaniam | Video

Market expert Sunil Subramaniam on ET Now said markets are likely to respond positively to the India-US interim trade deal, noting that while tariff-linked sectors may see an immediate reaction, the broader economic benefits could support sentiment over the longer term.

Subramaniam said, "it is positive that a tweet was followed by a formally signed document, indicating that Mr Trump did not change his mind in the interim. Second, I think the market will take it positively. India has a large labour force, a huge MSME sector and relatively low per capita income. Opening up access to another country -- especially the US, the world’s largest economy, accounting for about 25 per cent of global GDP -- is a significant opportunity for India. Initially, the market reaction is likely to be seen in tariff-impacted sectors, which have already witnessed a run-up following Mr Trump’s tweet and Mr Modi’s acceptance."

"However, I believe the rally will be sustained. Many of the benefits will accrue outside the stock market. The MSME sector, which contributes around 40 per cent of India’s GDP, is largely unrepresented in equity markets. As a result, the listed players may see their valuations rise as they capture these benefits," he said, adding, "there could be a strong initial reaction, but over time it should stabilise. I see broader economic gains from the deal, benefiting several related sectors. If MSMEs gain, it will lead to higher job creation, increased per capita income and stronger consumption, which the markets will eventually reflect."

Subramaniam cautioned, "a few questions remain unanswered, particularly regarding the Russia situation and the extent of access being given to Indian agriculture, even if on a limited scale."

The US and India on Saturday announced that they have reached a framework for an interim trade agreement, under which America will reduce tariffs on India to 18 per cent, according to a joint statement issued by the White House. Both have announced that they have reached a framework for an Interim Agreement regarding reciprocal and mutually beneficial trade (Interim Agreement). The framework reaffirms the countries’ commitment to the broader U.S.-India Bilateral Trade Agreement (BTA) negotiations, launched by US President Donald J. Trump and Prime Minister Narendra Modi on February 13, 2025, which will include additional market access commitments and support more resilient supply chains.

The Ministry of Commerce & Industry has shared the joint statement in a late night note on PIB. The Interim Agreement between the United States and India will represent a historic milestone in our countries’ partnership, demonstrating a common commitment to reciprocal and balanced trade based on mutual interests and concrete outcomes.