Indian IT Confronts AI Disruption Amid Trade Relief

State Street Investment Management’s Mind on the Market reviews India’s tariff reprieve and the structural inflection in its IT sector 

• U.S.–India tariffs were reduced from 50% to 18%, lifting foreign inflows to ~$1.48bn in February and boosting sentiment.

• Yet Indian IT has lagged sharply: five-year returns of 0.7% versus 119% for U.S. IT, as AI compresses billable hours and pricing power.

• Margins (15.7%) and revenue growth (7%) trail long-term averages; valuations at ~19x forward earnings reflect a 20% discount to history.

Is AI a margin headwind—or the catalyst for a higher-value services pivot? The full report examines the transition.