India–US trade deal: Can tariff cuts lift demand for real estate?

India's recently announced trade agreement with the United States is expected to give a broad-based boost to the economy and could also lift demand for real estate, especially through stronger foreign investment and improved market sentiment.

India and the US clinched the trade pact on February 2, with Washington agreeing to cut tariffs on Indian goods to 18%, down from 50%.

The move gives India a competitive edge over key export rivals such as China, Indonesia, Vietnam and Bangladesh.

What it means for real estate

The agreement could indirectly support the real estate market by boosting foreign direct investment, particularly in commercial real estate.

Stronger capital inflows and rising demand for office space, especially from global capability centres, could benefit the sector.

A report by Antique Stock Broking said that the deal removes a major overhang for Indian markets that had persisted for nearly 15 months.

It noted, “This development is significantly positive for Indian equities as FPI equity outflow of USD 34 bn since Oct-24, the highest among EMs, may reverse as the US accounts for ~41% of FPI AUC and valuation premium relative to other EMs and DMs are near the long-term average.”

The report said that sectors with relatively high foreign portfolio investor (FPI) ownership including real estate, telecommunications, and transportation are expected to be among the primary beneficiaries if foreign inflows resume.

The tariff reduction is expected to ease risks to nearly USD 50 billion of Indian exports, particularly in labour-intensive sectors such as textiles, gems and jewellery, machinery, chemicals, plastics and agriculture.

Market participants, according to the report, remain constructive on Indian equities, with financials, capital goods, defence and consumer discretionary stocks seen as key overweight sectors amid improving external conditions and steady domestic growth.

While the full contours of the agreement are yet to be announced, US President Donald Trump said on social media platform Truth Social that reciprocal tariffs on Indian goods have been sharply reduced to 18% . In return, India has committed to reducing tariffs and non-tariff barriers to zero.

Commerce and industry minister Piyush Goyal said a joint statement detailing the pact will be issued soon.

He assured that the agreement would provide significant opportunities while protecting sensitive sectors. The deal, he said, “will protect the sensitive sectors, the interests of our agriculture and our dairy sectors in full respect.”

Goyal added that the agreement would open up major opportunities for labour-intensive sectors such as textiles, plastics, apparel, home décor, leather and footwear, gems and jewellery, organic chemicals, rubber goods, machinery and aircraft.