Indian Markets Surge on Renewed Hopes for India-US Trade Deal
India's benchmark stock indices, Sensex and Nifty, rallied following positive remarks from U.S. President Donald Trump about ongoing trade negotiations. Trump stated he was certain of a "successful conclusion" to talks aimed at addressing trade barriers. This signals a potential thaw in bilateral economic relations after recent tariff tensions. The optimism spurred a market rally, particularly in IT stocks, with the BSE Sensex jumping over 440 points and the NSE Nifty crossing the 24,900 mark in early trade.
Unpacked:
Key issues included disagreements over tariffs, agricultural market access (especially dairy and rice), intellectual property rights, and U.S. concerns about India’s continued purchase of Russian oil. Both countries also clashed over foreign investment rules and digital economy regulations, contributing to stalled negotiations and mutual tariff increases.
IT stocks benefited because the sector is heavily export-oriented, especially to the U.S., which is a major client for Indian IT services. Reduced trade tensions and the potential for fewer barriers signal stronger demand and improved profitability for Indian tech firms.
U.S.-India trade has grown substantially, reaching $142 billion in goods and services trade by 2018, making India the U.S.'s eighth-largest trading partner. Their trade volume now approaches that of major U.S. partners like South Korea and France, reflecting significant global economic ties.
In early 2025, after failed negotiations on agriculture, dairy, and India’s Russian oil imports, the U.S. imposed 25% tariffs on Indian goods, later doubling to 50%. India responded with harsh criticism, marking a low point in bilateral relations and prompting renewed negotiations.