SBI Research on India US Trade Deal indicates that the new bilateral trade agreement between India and the United States – which sets a reciprocal tariff rate of 18% on goods trade – could significantly strengthen India’s export competitiveness, expand bilateral trade, and increase India’s trade surplus with the US.
According to the SBI Research report (Issue #39, FY26, dated February 12, 2026), the trade deal follows recent agreements with the EU and the UK and places India in a “unique strategic position” where exporters can benefit “without ceding meaningful ground on matters of sensitivities.”
The SBI Research on India US Trade Deal Report estimates:
- At least $45 billion annual additional trade surplus with the US post-deal
- Net GDP impact of around 1.1%
- Foreign exchange savings of about $3 billion annually
- SBI Research on India US Trade Deal: Reciprocal Tariff Reduced to 18%
As per the India-US joint statement cited in the report:
India will eliminate or reduce tariffs on US industrial goods and a wide range of agricultural and food products, including dried distillers’ grains, red sorghum, tree nuts, fruits, soybean oil, wine, and spirits.
The United States will apply a reciprocal tariff rate of 18% on Indian goods, including:
- Textile and apparel
- Leather and footwear
- Plastic and rubber
- Organic chemicals
- Home décor and artisanal products
- Certain machinery
- The US will remove tariffs on certain aircraft and aircraft parts from India.
- India will receive preferential tariff-rate quotas for automotive parts.
- Negotiated outcomes were achieved for generic pharmaceuticals and ingredients.
- Both countries will address non-tariff barriers affecting bilateral trade.
India intends to purchase $500 billion of US energy products, aircraft, precious metals, technology products, and coking coal over five years.
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India Gains Competitive Tariff Position in Asia
With the negotiated 18% tariff, India now has one of the lowest tariff rates among major Asian exporters, improving competitiveness relative to regional peers.
SBI Research notes that Indian exports have regained competitiveness compared with other major Asian exporters despite tariff changes.
SBI Research on India US Trade Deal: Export Sectors Expected to Benefit
SBI Research on India US Trade Deal report identifies several sectors likely to gain from the trade agreement:
- Gems and jewellery
- Leather and leather products
- Textiles
- Chemicals
- Sea foods
- Engineering exports
The report states that inflation impact from energy sourcing is expected to be minimal.
Strong Export Dependence on the US Market
The US accounts for around 20% of India’s total exports, with higher shares in certain commodities:
Electrical machinery exports to the US account for nearly 50% of total exports in that category
- Pharmaceuticals: 35%
- Textiles: 45%
- Agricultural Exports to Receive Tariff Relief
SBI Research on India US Trade Deal Report highlights that:
- India has a $1.3 billion agricultural trade surplus with the US.
- About $1.36 billion of agricultural exports will receive zero additional US duty access.
- 75% of agricultural exports valued at $1.035 billion will have zero reciprocal tariff.
Key agricultural commodities expected to benefit include:
- Rice
- Spices
- Oilseeds
- Tea and coffee
- Fishery products
The report notes that the US imports about 10% of fishery products from India, and the reduced tariff could support the sector.
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Demand-Supply Gap Creates Export Opportunity
SBI Research identifies a $3 trillion demand-supply gap in the US market, with India currently supplying only about 3%.
Lower tariffs are expected to improve the positioning of Indian goods in the US market.
The report estimates:
- Export potential for top 15 commodities could increase by about $97 billion annually
- Total export potential could cross $100 billion annually
Imports from the US Also Expected to Rise
India’s imports from the US currently account for about 7% of total imports, though in some commodities the US share ranges between 20% and 40%.
India’s commitment to reduce tariffs on US industrial and agricultural goods and purchase $500 billion of US products over five years is expected to increase imports.
SBI Research estimates:
- More than $50 billion annual import potential from the US
- Total import increase could reach about $55 billion annually
- Trade Surplus Could Cross $90 Billion Annually
According to SBI Research estimates:
- Export increase: $100 billion
- Import increase: $55 billion
- Additional goods trade surplus: $45 billion
India’s trade surplus with the US:
- $40.9 billion in FY25
- $26 billion in FY26 (Apr–Dec)
- Could cross $90 billion annually after the deal.
The report also estimates:
- GDP increase of about 1.1%
- FX reserve savings of around $3 billion annually
