India-US Sign Deal, Says Trump; Tariff Reduced To 18%

US president Donald Trump said late on Monday on his social media platform Truth Social that India and the US had signed a trade deal. And with immediate effect Reciprocal Tariff is being lowered from 25% to 18%. Meanwhile, Prime Minister Narendra Modi thanked Trump on social media, “on behalf of the 1.4 billion people of India for this wonderful announcement”.

Fast Facts: Trump said he had a call with Prime Minister Modi. “Out of friendship and respect for Prime Minister Modi and, as per his request, effective immediately, we agreed to a Trade Deal between the United States and India,” the American president said on a social media post. He said that India had agreed to “reduce their Tariffs and Non-Tariff Barriers against the United States, to ZERO”.

Context: Trump also said that India had agreed to stop buying Russian oil. The two countries have had months of tension over the trade deal, with India buying Russian oil being one of the biggest points of contention. India faced a total tariff of 50% after the US imposed punitive tariffs on India for buying Russian oil.

What Next? GTRI's Ajay Srivastava pointed out that the announcement leaves several points unclear and needs clarification. "Trump claims India will reduce tariffs and non-tariff barriers on U.S. products to zero, but does not specify how many products are covered under India’s commitment. India has previously resisted opening sensitive sectors such as food grains, genetically modified products, and other regulated imports," Srivastava said.

Srivastava also said that until there was a joint statement and further clarity, this should be seen more as a political signal and not a final deal. "Caution, not celebration, is needed," he said.

India’s Small-Car Revival Hands Maruti Volume, But Not Certainty

By Shubhangi Bhatia

What?

For the first time since early 2025, Maruti Suzuki has seen a definitive surge in what has long been its bread-and-butter segment: small cars. In December, volumes for mini and compact models like the Alto K-10 and WagonR spiked 50% year-on-year to nearly 93,000 units. The company’s small-car portfolio share rose from 16.7% to 20.5%.

This revival comes after a punishing few years where the “people’s car" maker watched the market aggressively pivot toward SUVs. While the industry and consumer preference have veered towards SUVs, Maruti’s entry-level numbers are suddenly painting a different picture.

Why?

The catalyst is fiscal, not just sentimental. A rare single-stroke GST reduction (from 28% to 18%) for this specific segment has acted as a massive stimulus. As Maruti’s Rahul Bharti noted, tax cuts of this magnitude are "uncommon," and they successfully triggered pent-up demand.

However, it’s not just about cheaper price tags. Maruti Chairman RC Bhargava has long argued that the slump in small cars wasn't because Indians suddenly stopped wanting them, but because regulatory costs (safety and emission norms) priced out the 85% of households earning under Rs 15 lakh annually. The tax cut has temporarily corrected that affordability gap, bringing rural buyers and two-wheeler upgraders back into the showroom.

Why Does It Matter?

This resurgence creates a fascinating tension in the Indian auto market. On one side is the "SUV-isation" of India, where SUVs now command 55% of the market and offer fat margins for global OEMs. On the other is a significant share of Indian households that still operate at much lower income levels, effectively anchoring them to the small-car segment.

For Maruti, this is a double-edged sword. While volumes are back, the small-car segment is thin on profit margins compared to SUVs. Furthermore, looming regulatory hurdles, like the CAFE-3 norms arriving in 2027, could force prices up again unless specific weight-based exemptions are granted, a move rivals like Tata and Hyundai strongly oppose.

Avik Chattopadhyay, founder of brand consulting firm Expereal and a former executive, argues that a 40% market share is healthy and sustainable for a leader, but only if Maruti redefines itself as a "mobility provider" rather than just a carmaker. Crucially, he warns that the company must stick to its mass-market core rather than chasing premium positioning.

Is this a sustainable turnaround for the entry-level market, or just a tax-induced sugar rush before the inevitable shift to larger vehicles resumes?

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55.4

That’s India’s January PMI or Purchasing Managing Index, measured by HSBC and S&P Global. It measures the health of India’s manufacturing sector, and takes into account measures of new orders, output, employment, supplier delivery times and stocks of purchases.

Fast facts: January’s PMI marked a marginal step up from December’s 55.0, a two-year low, after manufacturers lost momentum at the end of 2025 due to slower growth in new orders and production.

On the positive side, Pranjul Bhandari, Chief India Economist at HSBC, said manufacturing activity rebounded in January. “Indian manufacturing firms saw a rebound in January, driven by increased new orders, output and employment,” she said.

Pivot: Bhandari also flagged emerging pressure points. She said input costs rose moderately, while growth in factory-gate prices eased further, leading to slight margin pressure for manufacturers. Export demand remained comparatively weak, expanding at one of its slowest rates in 15 months.

Overall, January’s data suggest that India’s manufacturing sector regained momentum after December’s dip, but business confidence softened sharply. Only 15% of firms expect output to grow over the next year, while most anticipate no change. Weak export demand and rising input costs, combined with limited pricing power, continue to weigh on expectations for future growth.

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The Markets Are Up Again But All Eyes On Metals

On Episode 789 of The Core Report, financial journalist Govindraj Ethiraj talks to Prasanna Tantri, Associate Professor of Finance and the Executive Director of the Centre for Analytical Finance at the Indian School of Business (ISB) as well as Rajesh Sinha, Independent Director at Sahyadri Farms.

• The markets are up again but all eyes on metals

• India’s farmers can seize the FTA opportunity but there is work to do.

• Oil prices dip after Trump says he will talk to Iran.

• The gold and silvery story

• What are the top level Budget numbers looking like ?