India-US Trade Deal to Boost FDI in Real Estate

India and the United States reached a major trade deal on February 2, with Washington reducing tariffs on Indian goods to 18 percent, improving India’s competitiveness against China, Vietnam, Indonesia, and Bangladesh.

Commerce Minister Piyush Goyal said negotiations are in final stages, with technical details to follow in a joint statement.

Beyond trade, the pact aims to integrate India into Global Value Chains (GVCs) and attract investments worth lakhs of crores, while enabling access to advanced sectors like Artificial Intelligence (AI), semiconductors, critical minerals, data centres, and Global Capability Centers (GCCs).

Key Highlights

• Tariff cut to 18 percent may accelerate FDI and GCC-led office demand
• US investments in Indian real estate surged 63 percent YoY in 2025
• Record $8.4B institutional inflows signal strong market fundamentals

Experts say the agreement could positively impact commercial real estate by improving investor sentiment, easing macro uncertainty, and driving foreign direct investment (FDI). A JLL report showed foreign capital deployment rose 18 percent YoY in 2025, with US investors increasing investments from $1.6B to $2.6B (63 percent growth). ANAROCK’s Santhosh Kumar noted lower tariffs on building materials could reduce input costs and boost office demand.

In 2025, institutional real estate investments hit a record $8.4B. The deal may reverse foreign outflows as the rupee strengthens, reducing currency risk. GCC leasing reached 29 msf, forming 33 percent of total leasing, with US firms driving ~75 percent of demand.

Major US players include Blackstone, the largest foreign real estate investor in India, and the Trump Organization, which operates a licensing-led luxury model. Other active firms include Tishman Speyer and Marriott International in commercial and branded residential projects.

 “The sectors expected to benefit the most include textiles and apparel, chemicals, leather, and gems and jewellery. The deal is widely seen as reducing the uncertainty that had weighed on Indian markets and the rupee, and as improving business sentiment,” said JLL, a global real estate consultancy.

“Indirectly, the benefits on India’s real estate market are undeniable. Lower trade tensions and a stronger currency support capital inflows and foreign investment confidence, which historically helped commercial and residential property markets. Conversely, without such an agreement, tariff-related export stress had risked slowing broader economic growth, potentially dampening demand in the price-sensitive real estate sector,” said Samantak Das, Chief Economist and head of Research and REIS, India, JLL.

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“The commercial real estate sector is expected to benefit from higher global institutional funding. Lower tariffs could boost manufacturing-led businesses, while rising exports are likely to attract engineering research and development–focused global capability centres, driving increased demand for leased commercial space,” said Das.