US-China Deal A Breather For Indian IT sector

Bengaluru: US-China trade deal is likely to ease pressure on technology spending, especially by enterprises in manufacturing and retail sectors. However, the US government proposal to lower prices of prescription drugs may lead to lower spend by healthcare companies, industry experts said.

“US-China deal in a way has reduced the uncertainty with relation to tariff war between the world’s two largest economies. So, it will ease pressure on companies operating in manufacturing and retail sectors with regard to technology spending. However, it has to be seen how the whole scenario plays out in coming months,” Pareekh Jain, an IT outsourcing advisor & founder of Pareekh Consulting, told Bizz Buzz. After a barrage of tariffs and counter-tariffs by the US and China, both countries last week announced to suspend reciprocal trade tariffs by 115 per cent for 90 days. However, there are many nations, which are still negotiating trade deals with the US, which has created considerable uncertainty in technology world. Against this backdrop, US-China trade negotiations are seen as a reduction of those uncertainties to some extent.

Meanwhile, experts sounded a word of caution on recovery in technology spend in the US in the near future. “Though the trade deal eases pressure on IT firms, but the US administration’s move to lower prices of drugs may hit the healthcare sector,” observes Jain. In the recently concluded Q4 results, most Indian IT firms have projected to grow their revenues by low single digits in FY26. This is a far cry from double digit growth recorded by them in post Covid years.