Shares of those companies rose 3-3.3% intraday on Tuesday as investors appreciated potential gains from lower tariff barriers and stronger demand from US data center and telecom infrastructure projects.
US President Donald Trump said late on Monday that the two countries had agreed on a trade deal under which the US would reduce its reciprocal tariff on Indian goods from 25% to 18%, while India would reduce its tariffs and non-tariff barriers to the US to zero. The US is also scrapping an additional 25% tariff on Indian goods that was imposed in response to India’s oil purchases from Russia. Bloomberg. Further details of the agreement are still awaited.
“There will now be a preferential rate with 18% rates, up from 50% previously. The cable industry, especially companies that supply fiber optic cables, will benefit from data centers and fiberization in the US,” said Faisal Kawoosa, principal analyst at Techarc, a technology market research firm.
Uncertainties to go
According to Kawoosa, a bilateral trade agreement between the two countries will remove trade and customs uncertainties, and vendors like STL that already operate in the US will benefit from reduced tariffs.
Sure, since Trump imposed stiff tariffs on India, operating margins have narrowed for STL, while exports have declined for HFCL, Polycab, Havells India and RR Kabel over the past two quarters, according to management commentary.
The tariffs also deprive Indian cable and internet equipment makers of a major opportunity, with US companies awarding billions of dollars worth of contracts 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 fiber companies as it improves price competitiveness, reduces 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 have already secured US orders but faced margin or enforcement issues due to higher tariffs, this change offers immediate relief. It improves the viability of contracts by reducing procurement costs and easing pricing pressure,” he added.
Asked whether building manufacturing capacity in the US still makes sense for the companies, Cally said the lower tariff could benefit Indian cable and fiber companies with large, long-term contracted demand. He added that in most cases, final assembly or light manufacturing is more viable than full upstream manufacturing, especially for suppliers targeting strategic customers such as hyperscalers, large telecom operators or government-backed broadband projects.
Sterlite faced the onslaught
The impact of the higher tariff was felt most by STL, a key supplier of fiber optic cables to the US. Ajay Jhanjari, group CFO at STL, said during a call with analysts last month: “The US tariff reset, effective midway through Q2FY26, created a temporary headwind, reducing reported Ebitda by nearly 760bps in the third quarter of the current fiscal and pushing reported margins to 10.3%.
However, the new deal boosted investor sentiment in the company, with its shares rising 13.4% to ₹125 on the NSE on Tuesday.
Of note, North America’s share of STL’s revenue increased to 36% from 25% in the current financial year, management said, attributing this to data center construction and demand for high-fiber cables.
For cable and wire manufacturers such as Polycab India, RR Kabel, Havells and others, exports to the US could be reflected in lower duties. These companies are primarily looking for opportunities in the US renewables, energy infrastructure, oil and gas, and data center sectors.
During an investor call on February 2, RR Kabel management said there could be a temporary impact on export growth opportunities due to tariff instability, but the company hoped exports would be much better and the US market would also open up.
The cable maker also saw its share of exports to the US fall 2 percentage points to 6% in the September quarter due to the tariffs. In addition to tariffs, companies in the industry are also facing higher costs for copper and aluminum, which are key raw materials in the production of wires and cables.