India-US trade deal could bring cheer amongst India’s FPIs

The announcement also puts an end to simmering trade tensions since mid-2025 when Donald Trump imposed tariffs on India for the first time.

The finalization of India-US trade deal could bring cheer amongst Foreign Portfolio Investors(FPIs) who have been on a selling spree in the Indian markets. In a social post, US President Donald Trump confirmed that the reciprocal tariffs on India were being reduced to 18% from 25% currently. This is likely part of the first tranche of a broader trade deal. The announcement also puts an end to simmering trade tensions since mid-2025 when Donald Trump imposed tariffs on India for the first time.

The development assumes significance as the foreign funds net sold Rs 2.4 lakh crore worth shares in the secondary market. However, they also bought Rs 73,909 crore worth shares in primary issuances pegging the net FPI outflow at Rs 1.66 lakh crore, data from depositories showed.

“Delighted that Made in India products will now have a reduced tariff of 18%. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement. When two large economies and the world’s largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation.” Said Indian Prime Minister Narendra Modi in a post on social media platform X.

President Trump’s leadership is vital for global peace, stability, and prosperity. India fully supports his efforts for peace

Market participants say the announcement would make India more attractive bet for FPIs as this US-India trade deal along with India-EU trade deal that was finalized last week would provide impetus to India economy.

US is a major source of FPI investment into India with US funds accounting for over a third of total FPI assets in India. Currently there are 3,591 FPIs who have directly invested in India. The total number of US funds in India would be much higher since most US funds route their investments through jurisdictions like Singapore and Mauritius.