US-India Trade Deal Unlocks $128B Boost for Indian Manufacturing

As US-India trade talks are set to hit their July 9, 2025, deadline, international markets are closely watching the potential economic spillover effects. A successful partial agreement will see bilateral trade reach $128 billion with huge investment potential in the pharma, auto component, and IT industry. Sectoral irritants and geo-political nuances, however, are the main holdouts.

Pharmaceuticals feature prominently in the trade deal too. India ships more than $8 billion worth of pharmaceuticals to the US, which accounts for 40% of its business in generic medicines. If tariffs decrease, Indian companies such as Sun Pharma and Dr. Reddy's, whose US revenues account for more than 35% of their turnover, can expect better margins and increased R&D spend. India is, however, looking for reciprocity to protect its $38 billion domestic industry.

• Pharma gains likely if tariffs ease; Sun Pharma and Dr. Reddy's stand out
• IT services poised to grow, led by TCS, Infosys, and Wipro in AI/cloud
• Geopolitical risks persist, with China and strategic autonomy in play

In the automotive industry, India wants more US market access but is cautious not to reduce its own protectionist duties that are already 50 percent on steel and 25 % on automobiles. Tata Motors and Ashok Leyland, to name two, would benefit from EV-component pieces if targeted under India's "Make in India" initiative, although this depends on US concession.

Also Read: AI-Powered Industry 4.0: Redefining the Future of Manufacturing Ops

The $33 billion IT services sector is projected for expansion. While the US waits for cloud and cybersecurity players to enter, Indian players such as TCS, Infosys, and Wipro stand ready to serve the growing US demand for digital and AI services.

Geopolitical uncertainties such as potential Chinese retaliation and Indian strategic non-alignment make it tougher. Investors are cautioned to be cautious on US-exposed sectors such as pharma and IT, but over-weight on auto components.

A successful one can bring in a multi-year bull run for Indian equities. But a failed one can lead to tit-for-tat US tariffs, derailing $87 billion worth of trade.