India-US Trade Deal: Navigating Export Booms and Agricultural Risks

The India-US interim trade deal, finalized in June 2025, averts the threat of a 26% US tariff on Indian exports, unlocking growth opportunities for key sectors while leaving unresolved tensions in agriculture. For investors, this creates a clear playbook: focus on labor-intensive industries poised to capitalize on tariff relief, while remaining cautious on agricultural plays until deeper negotiations resolve long-standing disputes.

The Tariff Relief Playbook
The deal's most immediate benefit lies in its targeted tariff reductions for sectors critical to India's export-driven economy. By avoiding the reimposition of the 26% surcharge, exporters in textiles, leather, gems/jewelry, seafood, and select industrial goods gain a competitive edge in the world's largest consumer market.

1. Textiles: A High-Impact Sector
India's $40 billion textile industry stands to benefit most. The US, which imported $4.2 billion in Indian textiles in 2024, now offers permanent relief from the 26% surcharge. Companies like Arvind Limited and Raymond—which derive 25–30% of revenue from US sales—could see margins improve as export costs stabilize.

2. Leather and Gems/Jewelry: Luxury and Labor-Intensive Exports
Leather goods and gems/jewelry are India's second-largest exports to the US, totaling $7 billion annually. Titan Company, a dominant player in leather watches and jewelry, and smaller firms like Mani Chandra Exports could gain market share as tariff barriers ease.

3. Seafood: Shrimp and More
Seafood exports, including shrimp—a $1.5 billion annual export to the US—are now shielded from punitive tariffs. Aqua Agro, a top shrimp exporter, and TNC Seafoods could see orders rise as US demand for affordable protein grows.

4. Electronics and Components (Indirect Benefits)
While the deal didn't explicitly cover electronics, tariff relief on plastic components and labor-intensive manufacturing could indirectly benefit firms supplying US tech giants. Hindustan Computers Limited and contract manufacturers like Flex India may see opportunities in US supply chains.

Risks: Agriculture and Beyond
The deal's limitations loom large. India's refusal to open its $80 billion dairy sector or permit genetically modified crops creates a powder keg. The US, which faces $50 billion in agricultural trade deficits with India, could retaliate by escalating non-tariff barriers or blocking future deals.

Investment Strategy: Play the Winners, Avoid the Minefield
- Buy:
- Textiles: Arvind Limited, Raymond (long positions for 6–12 months).
- Leather/Gems: Titan Company (dividend yield + growth).
- Seafood: Aqua Agro (focus on shrimp's rising US demand).

• Avoid:

• Agricultural plays (e.g., dairy, sugar) until the BTA's October 2025 deadline clarifies terms.

• Monitor:

• The October BTA negotiations for auto and data governance clauses.
• US probes into semiconductor and pharmaceutical tariffs, which could introduce new trade barriers.

Conclusion
The interim deal is a tactical win for India's exporters, but its true success hinges on resolving agricultural disputes. Investors should capitalize on the tariff relief in labor-intensive sectors while hedging against geopolitical volatility. As the saying goes: “Buy the dip in textiles, avoid the farm fight.”