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Indian capital goods gain from US tariff reduction and nuclear deal renewal

ICICIdirect Research 19 Feb 2026 DISCLAIMER

The proposed US tariff reduction to ~18% enhances the cost competitiveness of Indian engineering and renewable equipment exports to the U.S., supporting stronger order inflows. Simultaneously, under the $500 billion trade framework, renewed execution of the India–United States Civil Nuclear Agreement including U.S. designed reactor deployment and SMR scaling creates incremental EPC and high-value manufacturing opportunities for Indian capital goods players.
This deal clears the path for technology transfer approvals for companies like Holtec International positioning it to supply Small Modular Reactor (SMR) technology and equipment to India. This creates export visibility for U.S. nuclear vendors while opening downstream manufacturing and EPC opportunities for Indian partners such as Larsen & Toubro and potential project developers like NTPC Limited, supporting long-term reactor deployment and capacity expansion plans.
Export-linked upside for capital goods: Elgi Equipments (~50–55% exports), Aeroflex Industries (~75–80%), Timken India (~25%) and Anup Engineering (~40–50%) are well placed to see faster order inflows and improved realizations given existing U.S. customer relationships.
Aeroflex Industries: Despite operating under ~50% effective U.S. tariffs, the company maintained a strong EBITDA margin of ~23.5% (up 171bps YoY) in Q3FY26, highlighting pricing power and operating efficiency. With tariffs now reduced to ~18%, Aeroflex is positioned for incremental margin expansion and improved realizations on existing and new orders.
Elgi Equipments: Elgi had already factored in a ~25% U.S. tariff impact earlier through pricing actions, cost optimization and supply-chain adjustments. The subsequent tariff reduction provides additional upside, aiding margin stability and supporting stronger order conversion in the U.S. market.
Solar manufacturers benefit: Solar players with U.S. exposure such as Waaree Energies (overseas exports ~33% for 9MFY26), Vikram Solar (~ 16% exports for 9MFY26) Premier Energies (Q3FY26 export <~1% ) stand to gain from improved market access, supporting module shipments, capacity utilization and revenue growth.
Margin and visibility tailwind: Lower tariffs support incremental margin upside and enhance medium-term revenue visibility.

Stocks to benefit -L&T, NTPC, Powergrid, Elgi Equipments, Aeroflex Ind

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