Who gains most from India-US tariff rollback? Textiles, chemicals, seafood sectors in spotlight

• US cuts tariffs on Indian goods from 25% to 18%, effective immediately
• Export-heavy sectors like textiles, chemicals, and engineering set to benefit
• Markets react positively; Nifty futures and rupee surge after the announcement

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India’s export-oriented sectors are poised for a broad-based upside after New Delhi and Washington clinched a long-awaited trade agreement late on the evening of February 2. Under this agreement, the U.S. reduced reciprocal tariffs on Indian goods to 18 percent from 25 percent.

Announcing the deal, US President Donald Trump said it would be "effective immediately", signalling swift tariff relief for Indian exporters.

Trump, in a post on Truth Social, announced, "Out of friendship and respect for Prime Minister Modi and, as per his request, effective immediately, we agreed to a Trade Deal between the United States and India, whereby the United States will charge a reduced Reciprocal Tariff, lowering it from 25% to 18%."

Soon after, Prime Minister Narendra Modi, after speaking to President Trump, stated, "Wonderful to speak with my dear friend President Trump today. 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."

Notably, the rollback comes after months of stress following steep tariff hikes, in some cases up to 50 percent, that kicked in from August 27, 2025, sharply raising landed costs, hurting competitiveness and weighing on demand for Indian goods in the US, India’s largest export market. With the tariff burden now easing, companies with significant exposure to the US are expected to see relief in margins, improved competitiveness and better order visibility.

As per market participants, the tariff cut is a meaningful positive for several export-heavy sectors, including textiles and apparel, seafood, auto ancillaries, engineering goods, chemicals, gems and jewellery, and select consumer exporters.

Textiles & Apparel: Clear winner

Textiles and apparel are widely seen as the biggest beneficiaries of the pact. The US accounts for nearly 28% of India’s total textile exports, making it the single largest destination for Indian manufacturers. More than half of India’s textile and apparel imports are also linked to US cotton, underscoring deep trade integration.

The segment is among the most price-sensitive within India’s export basket. Products such as cotton garments, home textiles and made-ups compete directly with suppliers from Bangladesh, Vietnam and other low-cost hubs. A reduction in tariffs narrows the pricing gap and supports large exporters supplying US retailers in mid-value categories.

Companies with higher US exposure are likely to see faster volume recovery and improved pricing power. Stocks with significant US revenue exposure include Indo Count Industries (70%), Kitex (70%), Gokaldas Exports (67%), Pearl Global (64%), Welspun India (61%), Himatsingka Seide (60%), Trident (28%), Vardhman Textiles (25%), SP Apparels (22%), Arvind (14%) and KPR Mills (9%).

Chemicals: China-Plus-One tailwind

In chemicals, particularly speciality chemicals and intermediates, exports are governed by long-term contracts and stringent compliance norms. While demand is less sensitive to short-term price swings, tariffs directly impact net realisations.

The tariff cut strengthens India’s position in US supply chains looking to diversify under China-plus-one strategies. Key beneficiaries include UPL (20-25% US exposure), SRF (20%) and Jubilant Ingrevia (9%). Other potential gainers include Aarti Industries, PI Industries, Atul, Navin Fluorine International, Deepak Nitrite, Vinati Organics, Alkyl Amines Chemicals and Gujarat Fluorochemicals.

Engineering Goods: Boost in competitiveness

Engineering exporters are also expected to benefit. Engineering goods form the largest share of India’s merchandise exports to the US, spanning industrial machinery, electrical equipment and capital goods. These businesses typically operate on thin, single-digit margins, making tariff relief immediately earnings-accretive.

Lower tariffs improve India’s competitiveness versus East Asian suppliers, especially in contract renewals and incremental orders. While volumes may not spike immediately, exporters gain pricing flexibility and stronger negotiating leverage in long-term supply agreements.

Stocks with notable US exposure include Sona BLW (40%), Ramkrishna Forging (27%), Bharat Forge (25%), Samvardhana Motherson (18%), Balkrishna Tyres (18%), Sansera Engineering (9%) and Apollo Tyres (3%).

Gems & Jewellery: Landed cost relief

Gems and jewellery exports, including cut and polished diamonds and gold jewellery, are high-value but fiercely competitive. Tariffs directly impact retail pricing and inventory costs for US wholesalers and retailers. The reduction from 25% to 18% lowers landed costs, easing margin pressure for Indian exporters.

Consumer, IT: Sentiment positive

Select consumer exporters are also expected to see incremental gains. LT Foods derives 39% of its revenue from the US, followed by Tata Consumer Products at 12% and KRBL at 10%.

The IT sector stands to benefit indirectly through improved sentiment and stronger bilateral ties, though tariffs do not apply to software exports as they fall under services trade.

Seafood: Demand, margins to stabilise

The seafood sector is another key beneficiary, with the US remaining a critical market for Indian exporters, particularly shrimp and frozen foods. Lower tariffs are expected to reduce landed costs, aiding demand recovery and improving earnings visibility.

India’s seafood exports to the United States are expected to recover after months of decline, following Washington’s decision to lower tariffs to 18 per cent from 25 per cent, the Seafood Exporters Association of India (SEAI) said on Tuesday.

Exports to the US fell 15 per cent by volume to 201,501 tonnes during April–November of the current fiscal, while value declined 6.3 per cent to USD 1.72 billion from USD 1.84 billion a year ago, SEAI General Secretary KN Raghavan said.

“With the field becoming level again, exports should get a boost,” Raghavan told PTI. “We expect that with tariffs coming down to 18 per cent, we should get back to previous levels.”

Among listed players, Apex Frozen Foods derives 63% of its revenue from the US, followed by Waterbase at 40% and Avanti Feeds at 14%. Companies with higher dependence on the US market could see sharper profitability improvement as volumes stabilise.

Markets and sectoral reactions

Markets have reacted sharply to the long-awaited announcement.

Nifty 50 futures at GIFT City surged as much as 3.8% in thin trading, the US-listed iShares MSCI India ETF rose 3%, and the rupee strengthened 1% in offshore trade.

Shortly after the announcement of the deal, Kotak Mahindra AMC MD Nilesh Shah said, "While devil is in the details, it removes a hanging sword over rupee, equity and rates market. Let us hope that it is a win-win deal for both the countries as they have lot to gain through cooperation."

Welcoming the deal, NSE MD and CEO Ashish Chauhan said in a post on X, "Welcome move for global trade! Congratulations! After today evening's talks between the US President Mr Donald Trump and the Indian Prime Minister, Shri Narendra Modi, tariffs on Indian goods coming down sharply from 50% to 18% with immediate effect. A big win for businesses, supply chains, and the India-US partnership. Kudos to the teams involved in bringing this historic deal to a close."

Former Finance Commission chairman Arvind Panagariya said, "Bravo! Two of the world's toughest negotiators come to an agreement. So, we have both the father and mother of all trade deals! Congratulations Prime Minister! India is unstoppable under your leadership!!"

Meanwhile, hailing the historic deal, Commerce and Industry Minister Piyush Goyal said the agreement "unlocks the power of two large democracies working together for the shared prosperity of their people" and creates unprecedented opportunities for farmers, MSMEs, entrepreneurs and skilled workers.

"This agreement unlocks unprecedented opportunities for farmers, MSMEs, entrepreneurs, and skilled workers to Make in India for the world, Design in India for the world, and Innovate in India for the world. It will help India get technology from the US. It is not just a trade deal – it is a historic turning point that will reshape India-U.S. relations and accelerate our journey towards Viksit Bharat 2047," the minister noted.