New Delhi, US President Donald Trump’s announcement of 27 per cent reciprocal tariffs on India has created market uncertainty with the country’s exports expected to face new challenges, India Inc and experts said on Thursday.
The move is likely to cause a major realignment of global trade and manufacturing value chains.
The US has announced additional 27 per cent import duties on India saying New Delhi imposes high tariffs on American goods, as the Donald Trump administration aims to reduce the trade deficit and boost manufacturing.
InCred Wealth CEO Nitin Rao said the “markets will have to price this in, both in terms of sentiment and earnings. Volatility would continue but at some point it will result in sharp falls over a few days which may give good buying opportunities in a new economic order for high risk investors”.
Industry bodies believe the real impact of the announcements may be gauged only after a proper assessment.
“Tariffs unveiled by President Trump last night would bring a major realignment in global trade and manufacturing value chains. India has been placed somewhere in the middle of the tariff rates at 27 per cent in addition to 10 per cent baseline duties, which needs to be assessed for real impact,” said ASSOCHAM President Sanjay Nayar.
“Net-net, it appears India’s export competitiveness to the US market stands far less impacted on a relative basis. Yet our industry should make concerted efforts to increase export efficiency and value addition, to mitigate impact of these tariffs,” he said.
India’s robust industrial competitiveness will balance the impact of US tariffs, and GDP will see only a 0.1 per cent impact in the short term, said PHDCCI President Hemant Jain.
However, in the medium term, as the policy takes full effect, this shortfall will be negated, he added.
Going ahead, given India’s sustained economic development and strategic importance, we expect continuing collaboration with the US through a well-negotiated bilateral trade agreement, the ASSOCHAM President said.
Bajaj Broking Research said the tariffs have created “market uncertainty, leading to currency fluctuations and cautious investor sentiment”.
“The Indian export industry is expected to face challenges due to this tariff increase. Key sectors such as textiles, pharmaceuticals, and automotive components, which have significant export volumes to the US, may experience reduced demand, affecting production and employment,” it stated.
Kama Jewelry MD Colin Shah said the gems and jewellery sector will be the most affected as import tariffs may be up to 20 per cent from the current zero per cent on loose diamonds and 5.5-7 per cent on gold jewellery.
The US is one of India’s largest jewellery export markets, accounting for almost 30 per cent of the share. Indian jewellery exports to the US are over USD 11 billion per year.
GX Group CEO Paritosh Prajapati said, “The 27 per cent tariff under a Trump-led trade agenda will impose a notable cost barrier on Indian hardware exports to the US. However, this remains comparatively lower than tariffs levied on other major Asian manufacturing hubs. As a result, India-based manufacturing still holds competitive edge given that there is already a significant focus on scale, quality, and Make in India incentives.”
This article was generated from an automated news agency feed without modifications to text.
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