India-US trade deal 2026: 7 wins for service exporters
India and the United States signed a landmark Interim Trade Agreement on February 6, 2026. The deal slashed US tariffs on Indian goods from 50% to 18%. It also set the stage for deeper cooperation on digital services, technology trade, and professional mobility.
For India's $224 billion IT and services export industry, the deal brought relief and real opportunity. The US alone accounts for over $103 billion in Indian IT service exports each year. While the headline tariff cuts focus on goods, several provisions directly benefit service exporters.
Both nations also committed to a $500 billion bilateral trade target by 2030 under their "Mission 500" framework. NASSCOM and the US-India CEO Forum endorsed this goal at the India-US Technology Forum in February 2026.
Here are seven wins that Indian service exporters should know about right now.
1. Offshore delivery model stays safe from tariff crossfire
The biggest relief for Indian IT firms came from what the deal did not do. It kept services completely outside the tariff framework. This means the India-US bilateral trade agreement 2026 does not impose any duties on cross-border digital service delivery.
NelsonHall analyst Gaurav Parab confirmed that IT services are not being drawn into the tariff battle. Indian IT stocks surged on February 3, 2026. Persistent Systems rose 8%, Wipro climbed 7.4%, and TCS gained 5.2% in a single session.
For freelancers and small IT firms exporting software services to US clients, this stability matters. You can continue delivering projects without worrying about new levies on your invoices. The deal treats Indian IT service exports to the USA as a strategic asset, not a trade irritant.
2. Digital trade rules get a formal commitment
Both governments are committed to establishing robust India-US digital trade rules as part of the comprehensive Bilateral Trade Agreement, which is still under negotiation. The Joint Statement specifically pledges to prohibit customs duties on electronic transmissions.
This commitment protects SaaS companies, cloud service providers, and digital consultants from future digital tariffs. The agreement also calls for removing discriminatory practices and barriers that affect digital trade flows.
India and the US further agreed to increase bilateral trade in GPUs, semiconductor equipment, and data centre hardware. These commitments support the infrastructure that Indian service exporters depend on to ensure.
3. Equalization levy removal clears a major tax hurdle
India removed the equalisation of commerce equalisation levy on August 1, 2024. It then eliminated the 6% equalization levy on April 1, 2025. These moves resolved a long-standing friction point with the United States.
The removal means Indian digital service providers no longer face this extra tax layer when transacting with US companies. US tech firms also benefit, reducing the risk of retaliatory measures that could have indirectly hurt Indian service exporters.
The White House initially claimed the deal included further digital tax concessions. However, it quietly revised its fact sheet within 48 hours, suggesting India's Significant Economic Presence rules remain a live negotiating point for the broader agreement.
4. Data centre tax exemptions boost India's services infrastructure
India's Union Budget 2026-27 announced a 20-year tax exemption for hyperscalers that use Indian data centres to serve global clients. This zero-tax window extends through 2047 and includes a 15% safe harbour rate for related-party transactions.
This policy directly strengthens India's position as a global services delivery hub. When Amazon, Google, or Microsoft expand Indian datacenter capacity, local IT firms gain faster infrastructure and lower latency for US-bound services.
For Indian service exporters, more local data centres mean better performance guarantees in client contracts. They also reduce the cost of cloud-based delivery models that power modern software exports.
5. GST reforms deliver immediate cash flow relief
The 56th GST Council approved "GST 2.0" reforms in September 2025. These changes directly benefit Indian service exporters in three important ways.
First, the council removed the "intermediary" provision under Section 13 of the IGST Act. This provision previously required that intermediary services be taxed at the supplier's location in India. Its removal eliminates a major compliance headache and litigation risk for service exporters.
Second, the council simplified the GST rate structure from four tiers to two. The new structure uses only 5% and 18% slabs. This reduces classification disputes that often delay exporters' refund claims.
Third, the minimum refund threshold for exports with tax payment was removed. Small service exporters and freelancers now claim refunds without hitting a floor amount. The RBI also realised the export realisation period from 9 to 15 months in November 2025. This gives exporters more time to receive foreign payments without triggering GST refund reversals.
If you export services to the US and collect payments in foreign currency, these reforms put real money back in your pocket faster. You can learn about export incentives for Indian businesses to reduce your export totalization. India-US totalization agreement further moves closer to reality.
Indian workers in the US pay 7.65% in FICA taxes on wages up to $106,800. Most H-1B and L-1 workers return to India within five years, well short of the 10-year minimum needed to qualify for US Social Security benefits. Over the past decade, Indian nationals contributed an estimated $27.6 billion with no return.
India took significant steps in 2025 towards totalization of the India-US totalization agreement. In July 2025, India completed a national social security data-pooling exercise. ILO-validated data showed coverage jumped from 19% in 2015 to 64.3% in 2025.
India then successfully totalized an agreement with the UK in July 2025. This deal exempts Indian workers from UK social security for up to three years and saves over ₹4,000 crore annually. In November 2025, India formally proposed a similar arrangement with the US.
The February 2026 Joint Statement lists "labour" as a topic for the comprehensive trade totalization agreement. The totalization agreement has not been signed yet; it now sits firmly on the negotiation table. A completed deal would save Indian IT companies and professionals an estimated $4 billion per year.
7. H-1B changes push the remote delivery advantage
The Trump administration imposed a $100,000 fee on new H-1B petitions in September 2025. This fee represents a dramatic increase from the previous $2,000 to the $5,000 range. The new wage-weighted lottery system, effective February 27, 2026, further favours higher-paid applicants.
These H-1B visa changes for Indian professionals make on-site delivery far more expensive. FAANG companies responded by adding roughly 33,000 workers in India during 2025 — an 18% increase. India's Global Capability Centre ecosystem grew to 1,760 centres with 1.9 million professionals.
Rather than, for Indian service exporters, this shift is paradoxically positive. US companies are specifically seeking remote Indian talent rather than relocating workers. Freelancers and IT firms that deliver services from India gain a cost advantage over competitors who depend on physical presence.
If you are planning to expand your services to the US market, understanding how to export IT services to the USA can help you build the right strategy.
What should Indian service exporters do now?
The India-US trade deal of 2026 provides service exporters with a stable foundation. The offshore model is protected. Digital trade rules are coming. GST reforms have already improved totalization, and the totalization agreement is closer than ever.
Smart exporters will take three steps right now. First, review your GST export refund process to capture the new benefits from the intermediary provision. Secrecy of the ond, structure contracts to take advantage of India's data centre tax incentives when serving US clients. Third, watch the comprehensive bilateral trade agreement negotiations closely — digital trade rules and labour mobility provisions will shape the next decade of India-US services trade.
The deal is not perfect. Services market access, professional recognition, and visa facilitation still need formal agreements. But the direction is clear. India and the US are building a services trade corridor that benefits exporters who prepare early and move fast.
Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute financial or legal advice. Winvesta makes no representations or warranties about the accuracy or suitability of the content and recommends consulting a professional before making any financial decisions.
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Table of Contents
India and the United States signed a landmark Interim Trade Agreement on February 6, 2026. The deal slashed US tariffs on Indian goods from 50% to 18%. It also set the stage for deeper cooperation on digital services, technology trade, and professional mobility.
For India's $224 billion IT and services export industry, the deal brought relief and real opportunity. The US alone accounts for over $103 billion in Indian IT service exports each year. While the headline tariff cuts focus on goods, several provisions directly benefit service exporters.
Both nations also committed to a $500 billion bilateral trade target by 2030 under their "Mission 500" framework. NASSCOM and the US-India CEO Forum endorsed this goal at the India-US Technology Forum in February 2026.
Here are seven wins that Indian service exporters should know about right now.
1. Offshore delivery model stays safe from tariff crossfire
The biggest relief for Indian IT firms came from what the deal did not do. It kept services completely outside the tariff framework. This means the India-US bilateral trade agreement 2026 does not impose any duties on cross-border digital service delivery.
NelsonHall analyst Gaurav Parab confirmed that IT services are not being drawn into the tariff battle. Indian IT stocks surged on February 3, 2026. Persistent Systems rose 8%, Wipro climbed 7.4%, and TCS gained 5.2% in a single session.
For freelancers and small IT firms exporting software services to US clients, this stability matters. You can continue delivering projects without worrying about new levies on your invoices. The deal treats Indian IT service exports to the USA as a strategic asset, not a trade irritant.
2. Digital trade rules get a formal commitment
Both governments are committed to establishing robust India-US digital trade rules as part of the comprehensive Bilateral Trade Agreement, which is still under negotiation. The Joint Statement specifically pledges to prohibit customs duties on electronic transmissions.
This commitment protects SaaS companies, cloud service providers, and digital consultants from future digital tariffs. The agreement also calls for removing discriminatory practices and barriers that affect digital trade flows.
India and the US further agreed to increase bilateral trade in GPUs, semiconductor equipment, and data centre hardware. These commitments support the infrastructure that Indian service exporters depend on to ensure.
3. Equalization levy removal clears a major tax hurdle
India removed the equalisation of commerce equalisation levy on August 1, 2024. It then eliminated the 6% equalization levy on April 1, 2025. These moves resolved a long-standing friction point with the United States.
The removal means Indian digital service providers no longer face this extra tax layer when transacting with US companies. US tech firms also benefit, reducing the risk of retaliatory measures that could have indirectly hurt Indian service exporters.
The White House initially claimed the deal included further digital tax concessions. However, it quietly revised its fact sheet within 48 hours, suggesting India's Significant Economic Presence rules remain a live negotiating point for the broader agreement.
4. Data centre tax exemptions boost India's services infrastructure
India's Union Budget 2026-27 announced a 20-year tax exemption for hyperscalers that use Indian data centres to serve global clients. This zero-tax window extends through 2047 and includes a 15% safe harbour rate for related-party transactions.
This policy directly strengthens India's position as a global services delivery hub. When Amazon, Google, or Microsoft expand Indian datacenter capacity, local IT firms gain faster infrastructure and lower latency for US-bound services.
For Indian service exporters, more local data centres mean better performance guarantees in client contracts. They also reduce the cost of cloud-based delivery models that power modern software exports.
5. GST reforms deliver immediate cash flow relief
The 56th GST Council approved "GST 2.0" reforms in September 2025. These changes directly benefit Indian service exporters in three important ways.
First, the council removed the "intermediary" provision under Section 13 of the IGST Act. This provision previously required that intermediary services be taxed at the supplier's location in India. Its removal eliminates a major compliance headache and litigation risk for service exporters.
Second, the council simplified the GST rate structure from four tiers to two. The new structure uses only 5% and 18% slabs. This reduces classification disputes that often delay exporters' refund claims.
Third, the minimum refund threshold for exports with tax payment was removed. Small service exporters and freelancers now claim refunds without hitting a floor amount. The RBI also realised the export realisation period from 9 to 15 months in November 2025. This gives exporters more time to receive foreign payments without triggering GST refund reversals.
If you export services to the US and collect payments in foreign currency, these reforms put real money back in your pocket faster. You can learn about export incentives for Indian businesses to reduce your export totalization. India-US totalization agreement further moves closer to reality.
Indian workers in the US pay 7.65% in FICA taxes on wages up to $106,800. Most H-1B and L-1 workers return to India within five years, well short of the 10-year minimum needed to qualify for US Social Security benefits. Over the past decade, Indian nationals contributed an estimated $27.6 billion with no return.
India took significant steps in 2025 towards totalization of the India-US totalization agreement. In July 2025, India completed a national social security data-pooling exercise. ILO-validated data showed coverage jumped from 19% in 2015 to 64.3% in 2025.
India then successfully totalized an agreement with the UK in July 2025. This deal exempts Indian workers from UK social security for up to three years and saves over ₹4,000 crore annually. In November 2025, India formally proposed a similar arrangement with the US.
The February 2026 Joint Statement lists "labour" as a topic for the comprehensive trade totalization agreement. The totalization agreement has not been signed yet; it now sits firmly on the negotiation table. A completed deal would save Indian IT companies and professionals an estimated $4 billion per year.
7. H-1B changes push the remote delivery advantage
The Trump administration imposed a $100,000 fee on new H-1B petitions in September 2025. This fee represents a dramatic increase from the previous $2,000 to the $5,000 range. The new wage-weighted lottery system, effective February 27, 2026, further favours higher-paid applicants.
These H-1B visa changes for Indian professionals make on-site delivery far more expensive. FAANG companies responded by adding roughly 33,000 workers in India during 2025 — an 18% increase. India's Global Capability Centre ecosystem grew to 1,760 centres with 1.9 million professionals.
Rather than, for Indian service exporters, this shift is paradoxically positive. US companies are specifically seeking remote Indian talent rather than relocating workers. Freelancers and IT firms that deliver services from India gain a cost advantage over competitors who depend on physical presence.
If you are planning to expand your services to the US market, understanding how to export IT services to the USA can help you build the right strategy.
What should Indian service exporters do now?
The India-US trade deal of 2026 provides service exporters with a stable foundation. The offshore model is protected. Digital trade rules are coming. GST reforms have already improved totalization, and the totalization agreement is closer than ever.
Smart exporters will take three steps right now. First, review your GST export refund process to capture the new benefits from the intermediary provision. Secrecy of the ond, structure contracts to take advantage of India's data centre tax incentives when serving US clients. Third, watch the comprehensive bilateral trade agreement negotiations closely — digital trade rules and labour mobility provisions will shape the next decade of India-US services trade.
The deal is not perfect. Services market access, professional recognition, and visa facilitation still need formal agreements. But the direction is clear. India and the US are building a services trade corridor that benefits exporters who prepare early and move fast.
Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute financial or legal advice. Winvesta makes no representations or warranties about the accuracy or suitability of the content and recommends consulting a professional before making any financial decisions.
Get paid globally. Keep more of it.
No FX markups. No GST. Funds in 1 day.
