New US Ambassador to India Sergio Gor has announced the resumption of trade negotiations between India and the United States, with the next call scheduled for tomorrow. The announcement comes as Gor assumes his diplomatic role with the clear objective of taking the India-US partnership to unprecedented levels.

Trade Deal Negotiations Resume

Gor emphasized the critical importance of reaching a trade agreement with India, describing it as the most essential partnership for the United States. The Ambassador highlighted the transformative potential of this collaboration, stating that the partnership "could be the most consequential global partnership of this century." He acknowledged the challenges both nations have faced in previous negotiations, noting that while "it is not an easy task to get across the finish line," both countries remain determined to achieve success.

India Invited to Join Pax Silica Initiative

In a significant strategic development, Gor announced that India will be invited to join Pax Silica as a full member next month. This US-led strategic initiative focuses on silicon and AI supply chains and currently involves key allies including Japan and South Korea. The inclusion represents a major milestone for India's semiconductor ambitions and strategic technology partnerships.

Presidential Messages and Future Visits

The Ambassador conveyed personal messages from President Donald Trump, referencing the President's positive memories of his previous visit to India and his strong relationship with Prime Minister Narendra Modi. Gor expressed optimism about a potential presidential visit to India within the "next year or two," further underlining the commitment to strengthening bilateral ties.

Diplomatic Vision

Gor characterized his tenure as a "once in a lifetime opportunity to redefine diplomacy," positioning the India-US relationship as a historic convergence at the "intersection between the world's oldest democracy and the world's largest democracy." This framing underscores the Ambassador's vision for transforming diplomatic engagement between the two nations.

The developments signal a renewed momentum in India-US relations, with both trade negotiations and strategic technology partnerships taking center stage in the diplomatic agenda.

Uncertainty surrounding the timing of an India-US trade deal has grown significantly, with fund managers indicating that expectations for a near-term agreement have substantially weakened. Industry experts suggest that even prolonged delays or sudden announcements may not materially impact Indian equity markets, as investors are advised to focus on long-term fundamentals rather than trade-related developments.

Supreme Court Delays Create Tariff Uncertainty

The US Supreme Court did not issue a ruling on Friday regarding the legality of Trump's broad tariff regime, extending uncertainty over whether existing tariffs will remain in place or face potential legal challenges. This delay has created additional complexity for trade relations between the two nations.

Meanwhile, legislation currently under discussion in the US includes provisions for punitive tariffs reaching up to 500%, which could severely impact India's export sector if enacted. The combination of legal uncertainty and potential new tariff measures has created a challenging environment for trade negotiations.

Fund Manager Perspectives on Deal Timeline

Speaking at the CFA Society's India Investment Conference on Friday, WhiteOak Capital's Prashant Khemka expressed diminished optimism about deal prospects. He noted being hopeful "till a couple of months ago, based on all the comments and these things," but acknowledged that the probability of concluding a deal soon appears to be declining.

Khemka highlighted the legal uncertainty surrounding US tariffs, noting that the Supreme Court "seems extremely apprehensive about overreach" and that some tariffs could face legal challenges. He cautioned that even if tariffs are rolled back or moderated, markets should not assume automatic positive reactions given broader macroeconomic and liquidity factors.

Limited Market Impact Expected

Fund managers emphasized that Indian markets have treated tariff developments with limited reaction thus far. The consensus among industry experts suggests that trade tensions may not significantly affect equity performance, given India's relatively small export exposure to the US.

Carenlian Capital's Vikas Khemani stressed the importance of company-specific analysis over sector-wide concerns. "In every sector that we don't like, there are companies that we like, and vice versa. You have to drill down to a company-specific basis," he explained.

Khemani also highlighted the limited macroeconomic impact, pointing out that "US exports are less than 2% of GDP. India grows that much in a quarter." This perspective suggests that trade tensions may have minimal overall economic impact on India's growth trajectory.

Structural Shifts Beyond Tariffs

HDFC AMC's Chirag Setalvad emphasized that current challenges extend beyond tariff issues, representing a broader structural shift in global economics. "This is not about tariffs," he stated, adding that "the bigger trend is for countries to now look out for themselves. America looks out for itself, Europe looks out for itself. We are no longer in globalisation."

Setalvad suggested that even resolution of tariff issues would not restore previous global cooperation levels, noting that new concerns would likely emerge to replace current trade tensions.

Investment Strategy Recommendations

Despite ongoing uncertainty, fund managers urged investors to maintain focus on long-term fundamentals rather than reacting to trade negotiations or tariff headlines. Khemka advised systematic investment approaches with long-term horizons, suggesting investors "take advantage" during crisis periods.

The experts noted that significant market corrections typically occur only during widespread economic damage scenarios. "Markets generally go down very sharply when there's a widespread bankruptcy risk," Khemka observed, suggesting current trade tensions may not reach such severe levels.

While acknowledging sector-specific pressures, particularly in textiles, fund managers maintained that selective opportunities exist across various industries through careful company-level analysis and fundamental research.