“These agricultural items constitute around 60-70% of India’s US farm imports which may face lower or zero tariffs,” said Goldman Sachs.
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The investment banking giant has already upgraded its forecast for India’s real gross domestic product (GDP) growth in calendar year 2026 by 20bp to 6.9% on-year reflecting the lower US tariffs.
India and the US have India-US issued a joint statement outlining the interim trade agreement, which will likely come into effect from mid-March. Washington has issued an executive order doing away with the 25% penal tariffs on India for buying Russian oil and will soon issue another one to lower the 25% reciprocal tariffs to 18%.
“Though component-level details are yet to be made available, after exclusions, we estimate the effective tariff rate imposed by the US on Indian imports may be around 20pp lower than the 34% earlier,” Goldman Sachs said.
Barclays, in a report Monday, said in its report that with tariffs being slashed to 18% from 25%, India’s trade competitiveness is back in play with comparable trade partners who face tariffs at modestly higher rates- Bangladesh (20%), Vietnam (20%), Thailand (19%), Pakistan (19%) and Indonesia (19%).“The agreement shows India’s careful approach in balancing trade opportunities with domestic protection,” Barclays said.
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It also said that gems and jewellery, textiles and apparels, leather and footwear, and marine exports would benefit the most as the effective tariff rate on India comes down to 16.3% now from 35.7% previously.
“As we previously highlighted, India has tapered its purchases of Russian oil, but not brought them down to zero. Should this continue to be a point of contention, the punitive tariffs could make a comeback,” Barclays said.
Notably, the US was the third-largest crude oil supplier to India in November, above traditional suppliers Saudi Arabia and UAE.