US-India Trade Deal: Tariffs on Indian Exports to US to Plummet to 12-13%

• BofA predicts effective tariffs on Indian exports to the US will drop to 12-13% after the recent trade announcement, down from a headline rate of 18%.
• The tariff reduction will significantly benefit labor-intensive sectors like gems and jewelry, textiles, agriculture, and engineering goods.
• India is expected to procure $500 billion worth of US energy, technology, agriculture, and coal products over five years, helping narrow the trade imbalance.
• The White House rolled back tariff penalties on India, including a 25% penalty related to Russian crude oil imports, reducing the cumulative tariff to 18%.
• BofA revised its RBI policy call from a 25 basis point rate cut to a hold, citing improved growth certainty post-trade deal, but expects continued liquidity management.

Why It Matters: A new US-India trade deal will drastically cut tariffs on Indian exports, boosting key sectors and trade relations.