The new U.S.–India trade deal won’t trigger an immediate supply-chain overhaul, but it will “tilt the spreadsheet” for U.S. multinationals weighing China alternatives, one strategist said.
The closely watched agreement, announced by President Donald Trump earlier this month, marks a significant shift in a key bilateral relationship. As one of America’s most important trading partners, India is poised to play a larger role in U.S. supply chains, with implications extending beyond tariffs.
Divakar Vijayasarathy, founder and CEO of DVS Advisory Group, told Benzinga that the deal signals a gradual, more durable shift rather than a sudden sourcing reset.
“The tariff cut doesn’t flip a switch; it tilts the spreadsheet,” he said, referring to how companies evaluate costs, risks, and long-term investments.
Between January and November 2025, the U.S. imported $95.4 billion worth of goods from India, a 19.2% increase from the same period in 2024. U.S. exports to India rose 9.6% over the same timeframe. December data has been delayed due to a partial government shutdown.
The deal could also carry direct market implications. Shares of U.S. exporters such as Boeing (NYSE:BA) and energy producers stand to benefit from India’s planned import commitments, while Indian manufacturing, electronics, and auto-component firms could see renewed investor interest as supply-chain diversification picks up.
Tariffs Fall As Trade Commitments Rise
Trump said the U.S. will cut tariffs on Indian goods to 18% from 50% under the new deal, after India “agreed” to halt purchases of Russian oil.
India’s tariff reductions on U.S. imports will follow later, after a formal agreement is signed, likely in mid-March, according to Commerce and Industry Minister Piyush Goyal.
India has also outlined plans to import at least $500 billion worth of U.S. goods over the next five years, driven by demand for energy, aircraft, data-center equipment, and ICT products. Current and pending Boeing orders alone are valued at $70–80 billion, potentially exceeding $100 billion when engines and spare parts are included, Goyal said.
According to the joint statement released last Friday, India will cut tariffs on U.S. industrial and agricultural goods like distillers’ grains, sorghum, nuts, fruit, soybean oil, and alcoholic beverages. The U.S. will reciprocally remove tariffs on items like pharmaceuticals, gems, and aircraft parts, with auto parts and pharma products subject to further provisions.
Tariff Cuts Tilt Decisions, Not Just Supply Chains
Vijayasarathy said the tariff cut reinforces shifts already underway, as U.S. companies have been reducing reliance on China for years.
India was always a contender, he said, but tariffs, regulatory complexity, and execution risk slowed progress. The new agreement changes the math rather than triggering immediate relocation.
For multinational companies, sourcing decisions are governed by contracts, compliance checks, and vendor qualification cycles that can take years.
From an operational standpoint, the shift unfolds in stages. Near-term activity typically involves pilot sourcing and contract renegotiations. In the medium term, companies invest in capacity expansion and supplier consolidation. Over the longer term, India could evolve from a contingency option into a structural node in global supply chains.
“So yes, this is more a signal than a shock,” Vijayasarathy said, particularly in terms of how companies allocate capital.
Reliability Matters More Than Cost
India’s gradual move away from Russian oil introduces a trade-off that U.S. investors should understand, Vijayasarathy said.
“From a U.S. supply-chain perspective, India stepping away from Russian oil reduces geopolitical ambiguity,” he said, noting that predictability has become a competitive advantage in the post-pandemic, post-Ukraine environment.
Higher energy prices could squeeze margins for Indian manufacturers in the near to medium term, especially in low-margin industries. Some of that pressure is likely to be passed on as slightly higher input costs.
But global manufacturers are increasingly willing to pay for reliability.
“Reliability has a premium — and U.S. multinationals increasingly prefer stable partners over the cheapest ones,” Vijayasarathy said.
India-focused ETFs have been mixed in early 2026. The iShares MSCI India ETF (BATS:INDA), the most liquid U.S.-listed India fund, is down about 0.96% year-to-date, though it has posted 6.7% gains over the past 12 months.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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