India-US trade deal boosts prospects of Indian cable & internet gear makers

Shares of these companies were up 3–3.3% intraday on Tuesday as investors priced in potential gains from lower tariff barriers and stronger demand from US data centre and telecom infrastructure projects.

US President Donald Trump said late night on Monday that the two countries had agreed on a trade deal under which the US would lower its reciprocal tariff on Indian goods from 25% to 18%, while India would reduce its tariffs and non-tariff barriers against the US to zero. The US is also removing the extra 25% duty on Indian goods that was applied in response to India’s purchases of crude oil from Russia, according to Bloomberg. Finer details of the deal are still awaited.

“There will be a rate advantage now with 18% tariffs now from the earlier 50%. The cables industry, especially companies that supply optical fiber cables, will benefit from the data centre and fiberization drive in the US," said Faisal Kawoosa, chief analyst at Techarc, a technology market research company.

Uncertainties to go

According to Kawoosa, a bilateral trade deal between the two countries will remove trade and tariff uncertainties, and vendors such as STL that already have a presence in the US will benefit from the reduced tariffs.

To be sure, ever since Trump imposed stiff tariffs on India, operating margins narrowed for STL, while exports contracted for HFCL, Polycab , Havells India and RR Kabel, according to management commentary over the past two quarters.

Tariffs have also been depriving Indian cable and internet gear makers of a major opportunity, with American companies awarding orders worth billions of dollars to build infrastructure for artificial intelligence (AI) companies.

Siddhant Cally, research analyst at Counterpoint India, said, “The reduction in US tariffs is a positive development for Indian cable and optical fibre companies, as it improves price competitiveness, lowers export risk, and provides better visibility into the US market. This should support a gradual recovery in exports and margins over time."

“For companies that had already secured US orders but faced margin or execution challenges due to higher tariffs, this change offers immediate relief. It improves contract viability by reducing landed costs and easing pricing pressure," he added.

Asked if building manufacturing capacity in the US still made sense for companies, Cally said the lower tariff could benefit Indian cable and optical fibre companies with large, long-term contracted demand. In most cases, he added, final assembly or light manufacturing is more viable than full upstream production, particularly for vendors targeting strategic customers such as hyperscalers, large telecom operators, or government-backed broadband projects.

Sterlite faced the brunt

The impact of the higher tariff was felt most acutely at STL, a key supplier of optic fibre cable to the US. Ajay Jhanjari, group chief financial officer at STL, said during an analyst call last month, “The US tariff reset, effective mid-quarter two of FY26, created a temporary headwind, reducing reported Ebitda by almost 760 bps in quarter three of the current fiscal and bringing the reported margins to 10.3%."

The new deal, however, boosted investor sentiment for the company, with its shares surging 13.4% to ₹125 on NSE on Tuesday.

Notably, North America’s share in STL’s revenue increased to 36% from 25% in the current financial year, management said, attributing it to data centre buildouts and demand for high-fibre-count cables.

For the cables and wires makers such as Polycab India, RR Kabel, Havells and others, exports to the US could rebound on lower tariffs. These companies are mainly looking at opportunities in the renewables, power infrastructure, oil & gas, and data centre sectors in the US.

During an investor call on 2 February, RR Kabel’s management said there could be a temporary impact on export growth opportunities owing to tariff instability, but the company was hopeful that exports would do much better and the US market would also open up.

The cable maker also flagged a 2-percentage-point decline in its share of exports to the US to 6% in the September quarter, owing to the tariffs. Besides the tariffs, the companies in the sector have also been grappling with higher costs of copper and aluminium, which are key raw materials in manufacturing wires and cables.