New Delhi, Feb 3 (PTI) The Indo-US trade deal will boost FDI as well as portfolio investments in the country, having a positive impact on the value of rupee, Chairman of Economic Advisory Council to the Prime Minister (EAC-PM) S Mahendra Dev said on Tuesday.

India and the US agreed on a trade deal under which Washington will bring down the reciprocal tariff on Indian goods to 18 per cent, lower than that for countries like China, Bangladesh and Vietnam.

US President Donald Trump made an announcement regarding the trade deal on Monday after a phone conversation with Prime Minister Narendra Modi.

Dev, in an interview to PTI Video, said the trade deal announcement is a "huge one" for India in several ways as some of the labour-intensive manufacturing sectors, like textiles and gems and jewellery, will benefit.

The Trump administration had imposed 50 per cent tariff, including 25 per cent penalty for purchasing Russian oil, impacting India's exports to America.

Dev said the 18 per cent tariff is lower than that on many countries, including Bangladesh, Vietnam, China and Brazil.

"Now with 18 per cent, we'll have the advantage. And I hope that India's exports will increase to the US and of course, we have FTAs with other countries -- the EU and the UK and many other countries. So our exports will increase further. And that will also have impact on growth. Our economic growth will be much higher than earlier," he said.

Observing that the net FDI and FII inflows were impacted because of uncertainties and repatriation, Dev said with the India-US trade deal, the situation will hopefully reverse, providing support to the domestic currency.

"So now with this announcement, I think the FDI as well as FII flows to the stock market, affected because of uncertainty regarding this deal, will hopefully increase. I think the impact on the rupee will also be positive," Dev said.

The India-US trade announcement comes within a week of New Delhi finalising a free trade agreement with the European Union.

Following the trade agreement announcement by US President Donald Trump, Prime Minister Modi said he was delighted that "Made in India products will now have a reduced tariff of 18 per cent".

"Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18 per cent. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement," Modi said.

He said when two large economies and the world's largest democracies work together, it benefits the people and "unlocks immense opportunities for mutually beneficial cooperation".

"President Trump's leadership is vital for global peace, stability, and prosperity. India fully supports his efforts for peace," Modi said on 'X'. PTI NKD UJN ANU

India-US trade deal cuts tariffs to 18%, expected to increase FDI and portfolio flows and support the rupee. The India-US trade agreement sets a reciprocal tariff of 18 per cent on Indian goods to the US, lowering barriers relative to several competitor countries and aiming to boost labour intensive exports. The tariff cut is expected to raise exports, support higher economic growth, and reverse uncertainty that reduced net FDI and portfolio inflows, with the resulting capital flows anticipated to have a positive impact on the rupee.