India-US Trade Agreement Brings Clarity, Boosts Sentiment in IT Sector

The India–US agreement will not have any immediate or direct impact on India’s information technology services sector, as it does not address areas that materially affect IT exports such as work visas, cross-border data flows, digital trade rules or outsourcing norms. However, analysts and industry executives said the deal has improved sentiment around the sector by bringing greater clarity on bilateral trade policy, which could help clients firm up budgets over time. Executives said the agreement does not alter the operating environment for Indian IT firms, whose revenues are driven largely by long-term contracts with US enterprises. Billing structures, delivery models and pricing dynamics remain unchanged, pointing to no near-term earnings impact. The US continues to account for about 55–60% of revenues for large Indian IT companies, making broader macro conditions and enterprise spending cycles more relevant than individual policy announcements. That said, the deal is being viewed as sentiment-positive at a time when the sector is emerging from a prolonged slowdown triggered by global trade and geopolitical uncertainties. Company leaders had struck a cautiously optimistic tone during December-quarter earnings calls, pointing to early signs of stabilisation after several quarters of delayed decision-making by clients. “The trade deal between India and the US will further spur this cautious optimism as businesses now have clarity on the trade dynamics. With this clarity, they will have confidence to deploy budgets and value-added projects, and not just routine undertakings,” said Gaurav Parab, principal research analyst at NelsonHall. Analysts said uncertainty around US trade policy had been a key factor holding back discretionary spending. Over the past four to six quarters, Indian IT companies saw steady order inflows, but deal conversions and project execution were deferred as US clients avoided committing to large spends amid abrupt tariff-related announcements. The December quarter showed the first signs of a more sustained recovery, and the bilateral deal is expected to lend further support to that trend. Some indirect opportunities could also emerge over the medium term if the agreement leads to deeper cooperation in manufacturing, supply chains and strategic technologies. These areas typically generate demand for enterprise software, cloud migration, engineering services and industrial digitalisation, which could benefit IT firms with exposure to manufacturing and ER&D work. Markets reacted positively to the announcement. Shares of major IT companies rallied 5–7% intraday before paring gains to close 1–2% higher on the BSE. American depositary receipts of Infosys and Wipro rose 4.32% and 6.75%, respectively, following the announcement. North America accounts for nearly half of revenues for companies such as Tata Consultancy Services. Analysts also pointed to broader macro factors supporting sentiment, including expectations of a more accommodative US interest rate environment later this year, which could further revive discretionary technology spending across key client verticals.