January and February 2026 will stand as one of the most exhilarating months in recent Indian economic history. Overnight, Prime Minister Narendra Modi and US President Donald Trump delivered a game-changing trade breakthrough: the United States slashed tariffs on Indian goods to 18% from about 50%, effective immediately. This decisive move, sealed after a warm phone call between the two global leaders, has unleashed a wave of optimism across India and the US's economies, markets and national spirit.
The personal chemistry between Modi and Trump was the catalyst that made it happen, and the deep people-to-people, democracy-to-democracy relationship between these two great democracies was the foundation. President Trump spoke glowingly of PM Modi as "one of my greatest friends" and a "powerful and respected leader", crediting their friendship for the outcome. PM Modi, in turn, expressed heartfelt gratitude to President Trump, thanking him on behalf of 1.4 billion Indians. The mutual respect, humility, shared vision and decisiveness bridged gaps.
The economic impact is transformative. The US is one of India's largest export destinations, and the earlier high tariffs could have hurt competitiveness in labour-intensive sectors, textiles, apparel, gems and jewellery, engineering goods, chemicals, pharmaceuticals and auto components and could have been like a penalty on US consumers. With tariffs now more favourable, Indian goods and exporters are poised to regain pricing power, secure fresh orders and expand margins, especially benefiting MSMEs that drive so much of our export engine. It's a big boost to the Make In India vision.
The stock markets have responded with euphoria. On February 3, Indian stock markets opened with historic gains, reflecting the sheer relief and excitement over the deal. The BSE Sensex soared as much as 3,656 points (around 4.5%) to open near 85,323, while the Nifty 50 jumped over 1,200 points (nearly 5%) to levels above 26,300 in early trade. By 10:15 am, the benchmarks remained firmly in positive territory, with the Sensex holding gains of over 2,300-2,500 points and the Nifty comfortably above 25,800-26,000, buoyed by broad-based buying across sectors, underscoring investor enthusiasm for export-linked and manufacturing plays. This rally marks one of the strongest single-day openings in recent memory - a direct vote of confidence in the deal's growth potential.
This breakthrough crowns India's remarkable trade-diplomacy resurgence in the last few years. The Modi government has pursued an ambitious, proactive agenda, finalising or advancing multiple high-impact agreements in recent years while safeguarding interests and furthering our strategic decisions. Commerce Minister Piyush Goyal noted that India has sealed eight FTAs covering 37 developed countries.
- India-EFTA TEPA (Switzerland, Norway, Iceland, Liechtenstein) - effective October 2025, with about $100 billion investment pledged
- India-UK CETA - signed July 2025, set to boost bilateral trade by $34 billion annually
- India-Oman CEPA - finalised in December 2025, offering duty-free access for about 98% of Indian exports
- India-New Zealand FTA - concluded in December 2025
- India-EU FTA, concluded in January 2026, granted preferential access to a 27-nation bloc with a ~$24 trillion combined GDP
These pacts, alongside the US breakthrough, expand market access, draw in job-creating capital and cement India as a trusted global partner and confirm that no matter what some compulsive cynics say, the Indian economy is not "dead". It's alive and kicking. It is a global growth engine. Nawabs of negativity, purveyors of pessimism and champions of cynicism will continue to raise bogeys, but the people of India are ignoring them.
At its heart, this is the triumph of optimism over cynicism. The deal reaffirms the strength of India-US ties between the world's two largest democracies, unlocks prosperity for citizens on both sides and fuels shared goals of fair trade, innovation and global stability. India's exporters, workers and entrepreneurs stand to gain immensely.
(The author is National Spokesperson of the BJP)
Disclaimer: These are the personal opinions of the author
