The United States established a new trade agreement which improved India's status in Asia. According to JM Financial's report the agreement will benefit both Indian markets and the Indian currency.
Lower Tariffs Support Indian Trade
- India and the US have established an interim trade agreement. The agreement decreases Indian product tariff rates from 50 percent to 18 percent. The tariff rate which applies to this product exceeds the US tariff rates which apply to Pakistan and China and Sri Lanka and Bangladesh.
- The report established that lower tariffs will enable Indian exports to reach higher volumes. The country will receive more US dollars through increased exports. The Indian currency is expected to gain strength against the dollar because of this inflow. These elements provide advantages to Indian equity markets which benefit especially from export-oriented industries.
Impact on Investments and Markets
JM Financial explained that India now stands in a better position compared to many Asian economies facing higher US tariffs. The report stated that foreign institutional investments will increase over time instead of starting to rise right away.
Opportunities for Indian Businesses
The two countries have established a framework which allows them to create temporary trade agreements. Union Minister of Commerce and Industry Piyush Goyal stated that the deal will give Indian exporters access to a $30 trillion market. The central government also said the agreement will create new opportunities for farmers, MSMEs, startups, innovators, and fishermen across India.
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