US Vice President JD Vance is seen through the viewfinder of a video camera, as he delivers a speech at the Rajasthan International Center, in Jaipur, India, April 22, 2025
| Photo Credit:
ANUSHREE FADNAVIS

As India moves closer to clinching a trade deal with the US, traders are trying to gauge the potential impact on companies that make everything from cholesterol-lowering generic drugs to bed linen sold in Walmart Inc’s mega stores.

Hopes for an early agreement brightened after US Vice President JD Vance said a trade deal with India will be “among” the first. Earlier, the White House said the two sides finalised the terms of reference for negotiations.

Optimism over trade has driven recent gains in Indian stocks and also lured foreign investors back to the South Asian nation. An influx of more than $1 billion in April has helped India’s equity market more than offset any negative impact from rising geopolitical tensions with Pakistan.

Even as specifics of India’s trade pact with the US and its impact on various industries are awaited, here are some of the sectors closely watched:

The Rupee 

The rupee surged to its highest level in seven months on Friday, shrugging off the recent geopolitical tensions with neighboring Pakistan. The currency is among the best performers in Asia this week.

Trade-deal expectations, foreign inflows, manageable inflation and a more accommodative central bank have helped the rupee, said Michael Wan, senior currency analyst at MUFG Bank Ltd.

Drugmakers

Pharmaceuticals have been an area where the US policy is yet to be made formal. Investors were surprised when the sector wasn’t mentioned in the early tariff list only to be followed by comments from President Donald Trump that such action remains on the cards.

Top generic drug makers Sun Pharmaceutical Industries Ltd, Cipla Ltd, Dr Reddy’s Laboratories Ltd and Lupin Ltd will be in focus. 

Automotive parts 

The prospect of a 25 per cent levy on auto parts threatens to hurt the industry already struggling with weak demand. While there has been some temporary relief given to automakers, a favourable deal will help Indian manufacturers gain market share due to relative advantage in comparison to other countries.

Stocks like Samvardhana Motherson International Ltd and Sona BLW Precision Forgings Ltd will be in focus.

Textiles and apparel

The sector was seen as a potential winner during the initial tariff announcement, as competing countries such as Bangladesh and Vietnam faced higher levies. If the deal offers easy access to the US market, that would provide a further boost to shares including Vardhman Textiles Ltd and KPR Mill Ltd.

Electric-vehicle makers

With Trump complaining about India’s high import duty on cars and recent reports of the country considering lowering the charges on Harley-Davidson motorcycles, there is expectation that the US will negotiate for better terms for the likes of Tesla. 

That’s likely to increase pressure on India’s auto manufacturers, particularly those focused on electric vehicles such as Mahindra & Mahindra Ltd and Tata Motors Ltd.

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Published on May 2, 2025