By Vivek Kumar M and Bharath Rajeswaran
(Reuters) -U.S. President Donald Trump on Wednesday slapped 25% tariffs on Indian goods, along with an unspecified penalty tied to energy and defence purchases from Russia — a move that, if enforced, could erode India’s export competitiveness and weigh on investor sentiment.
India’s trade surplus with the U.S. — its largest export market — stood at 1.2% of GDP in 2024. Analysts warn halving that surplus could shave 25–40 basis points off GDP, undermining India’s ‘safe haven’ narrative amid a global slowdown.
The relative appeal of Indian markets has also faded, with local equities underperforming peers like Vietnam and Indonesia, which have secured trade pacts with Washington.
CLSA said the tariff threat adds to uncertainty in an already expensive market.
With negotiations set to resume in mid-August, markets expect the final tariff rate to be lower than 25%. But until clarity emerges, export-linked sectors face significant near-term headwinds.
See below for a sector snapshot on who is exposed:
PHARMACEUTICALS
The U.S. accounts for nearly one-third of India’s pharma exports (about $9 billion in FY24). Jefferies estimates a 2–8% EPS hit for Biocon, Sun Pharma and Dr. Reddy’s, if generics are included.
HSBC warns of an up to 17% downside to FY26 earnings forecasts.
TEXTILES
Exporters like Welspun Living, Gokaldas Exports, Indo Count and Trident derive 40–70% of sales from the U.S. Higher tariffs could shift market share to Vietnam, which benefits from lower U.S. duties.
OIL REFINING
A proposed penalty on Russian oil imports could hit Reliance Industries and state-run refiners Bharat Petroleum and Hindustan Petroleum. Companies may face higher costs if forced to diversify crude sourcing.
AUTO COMPONENTS
Automakers have limited U.S. exposure, but parts makers including Bharat Forge and Sona BLW are vulnerable.Tata Motors’ Jaguar Land Rover unit is shielded under U.S.-UK/EU trade arrangements.
CAPITAL GOODS & CHEMICALS
Cummins India, Thermax and KEI Industries have 5–15% U.S. exposure.
Chemical exporters such as Navin Fluorine, PI Industries and SRF may face margin pressure, especially on refrigerant gas exports.
SOLAR EQUIPMENT
Waaree Energies and Premier Energies count the U.S. as a key market. Nearly 20% of Waaree’s FY24 revenue came from the U.S., which also accounts for a major chunk of its 59% overseas current order book.
(Reporting by Vivek Kumar M and Bharath Rajeswaran; Editing by Sonia Cheema)
