India’s financial markets are reacting with visible relief to a long-awaited trade agreement between Washington and New Delhi. The deal could mark a turning point for foreign capital flows into the country.
🤝 US President Donald Trump announced a significant reduction in US tariffs on Indian goods, following months of pressure related to India’s oil imports from Russia.
The details
The US will cut the so-called “reciprocal tariff” on Indian exports to 18 percent. In addition, an extra 25 percent punitive duty, previously imposed over India’s purchases of Russian crude oil, will be removed.
Result: The combined tariff burden drops from as high as 50 percent to a level that restores India’s competitiveness relative to regional peers.
The response was swift:
Nifty 50 futures surged by as much as 4.5 percent in overnight trading at GIFT City.
The rupee strengthened after hitting multiple record lows in recent sessions.
Risk appetite returned, a classic “risk-on” signal after months of defensive positioning.
The timing
Indian equities had just recorded their worst January since 2016, alongside record foreign investor outflows, driven by tariff uncertainty, weak earnings momentum, and broader macro concerns.
At the same time, India’s valuation premium versus other Asian markets has fallen to its lowest level in nearly five years. Much of the so-called “India premium” has already been priced out.
What remains unclear is whether India is willing — or able — to follow through on purchase commitments of up to $500 billion to the United States.
👉 Full story: Bloomberg, FinancialTimes, CNBC
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