India-US Interim Trade Deal Boosts India's Asia Position, Equities

Report says agreement will support India's exports, external balance, and market sentiment.

Feb. 9, 2026 at 2:47am

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According to a report by JM Financial, India's external position among Asian peers has improved following the announcement of an interim trade framework between India and the United States. The report highlights that the reduction in effective tariffs and removal of punitive duties is expected to support a rebound in India's trade surplus with the US, enhance dollar inflows, and provide a marginal appreciation bias to the Indian rupee. The agreement is seen as a clear sentiment positive for Indian equities, particularly export-oriented sectors.

Why it matters

The interim trade deal is an important step towards a broader bilateral trade agreement between India and the US. It is expected to boost India's exports, strengthen its external balance, and improve its position relative to other Asian emerging market peers that continue to face higher effective US tariffs.

The details

Under the framework, the US will apply a reciprocal tariff rate of 18% on Indian goods. The deal also outlines a path for the removal of reciprocal tariffs on a wider set of products if the interim trade agreement is successfully concluded. Beyond tariffs, both countries have agreed to address non-tariff barriers, establish rules of origin, strengthen supply chain resilience, and work towards ambitious digital trade rules as part of the proposed broader trade agreement.

  • The interim trade deal framework was announced in a joint statement by India and the US on February 6, 2026.
  • The US has legally withdrawn the additional 25% ad valorem duty under Executive Order 14329, effective February 7, 2026.

The players

Donald Trump

The US President who initially announced the trade deal on social media.

Narendra Modi

The Prime Minister of India who also announced the trade deal on social media.

JM Financial

An Indian financial services group that published the report analyzing the impact of the India-US trade deal.

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What’s next

The interim trade deal is positioned as the first step towards a broader bilateral trade agreement (BTA) between India and the US. The two countries are expected to continue negotiations to expand the scope of the trade deal and address non-tariff barriers, rules of origin, supply chain resilience, and digital trade rules.

The takeaway

The India-US interim trade deal is a significant development that is expected to boost India's exports, strengthen its external balance, and improve its position relative to other Asian emerging markets. It lays the foundation for a broader bilateral trade agreement that could further enhance economic cooperation between the two countries.