Historic U.S.-India Trade Deal Ignites Financial Markets

India's financial markets surged after a new U.S.-India trade agreement reduced U.S. tariffs on Indian goods to 18%. This deal is anticipated to boost Indian stocks, bonds, and currency, enhance foreign investment, and ease geopolitical tensions. Key industries like IT and auto are expected to benefit significantly.

India's financial markets showed robust gains on Tuesday, spurred by a new trade deal reducing U.S. tariffs on Indian goods from 50% to 18%. This unexpected move caused the Nifty 50 index to rise by nearly 3% and the rupee to strengthen by over 1% against the dollar.

Announced by U.S. President Donald Trump via social media, the trade deal also stipulates that India will halt its Russian oil purchases while lowering trade barriers on U.S. exports. The breakthrough has been hailed for boosting investor confidence and potentially increasing foreign investment in India.

The deal comes on the heels of a similar agreement with the European Union, expected to cut tariffs on the majority of traded goods. Pundits suggest this dual diplomatic success could reverse India's standing as a laggard in 2025's emerging markets, while economists anticipate a positive shift in the balance of payments for the fiscal year 2027.

(With inputs from agencies.)