India and the US and India released a joint statement last week announcing a framework for an Interim Trade Agreement (ITA), which will be negotiated as the first step toward a broader Bilateral Trade Agreement (BTA).
As per reports, the US will apply an 18 per cent reciprocal tariff on Indian products such as textiles and apparel, leather and footwear, plastics and rubber, organic chemicals, home decor, artisanal products and certain machinery, and outline the potential removal of reciprocal tariffs on a wider set of products.
That apart, the 25 per cent Russian oil-related duty on Indian imports will be removed, contingent on India ceasing its Russian oil imports and committing to US energy purchases, with a monitoring mechanism in place to ensure compliance.
Here’s how leading brokerages have interpreted the fine print.
Goldman Sachs
The pressure on the rupee has eased post the development, but we see limited room for it to run from current levels as any pick up in portfolio inflows on the conclusion of the India-US trade deal, is likely to be met with a gradual unwind of the short forward book, and further build-up of FX reserves by the Reserve Bank of India (RBI). On rates, we maintain our view that the policy rate easing cycle has concluded in India, and the RBI will keep the policy repo rate unchanged in CY26 at 5.25 per cent as downside risks to growth have receded.
Bernstein
The shift of Russian crude to US/Venezuela does bring costs, especially when discounts on Russian crude have started rising again and the distance will also increase now, but we believe the benefits far outweigh these costs as India gets a 25 per cent relief on most goods immediately. The diplomacy part of it including India’s relationship with Russia need another lens to look into.
Immediate economic benefits are not that large—and this was also the case when tariffs were high; the economic impact was not that high. The fine print needs to be seen to determine if any major area is missed out. We remain Neutral on India with a 28,100 Nifty target, and our near-term short-term rally argument is for the Nifty moving until 26,500, closer to where we started the year.
JM Financial
Despite improved clarity, the US Executive Order explicitly allows for re-imposition of duties should India resume Russian oil imports. Historical precedent, including the US–Korea FTA, highlights the risk of later sector-specific safeguards and reinterpretations. Trade policy under the current US administration remains closely intertwined with geopolitical considerations.
Geojit Investments
It is important to understand that India has a $41 billion export surplus in trade with the US. This may come down as India imports more energy, defense and aviation-related goods and high technology stuff from the US. The exclusion of cereals, dairy, and poultry safeguard the interests of India’s farmers’ interests.
