Big export boom: India benefits from Donald Trump's tariffs; Indian firms see competitive position in the US tariff scenario
The reduction of US tariffs on China from 145% to 30%, compared to India's currently suspended 26%, presents a positive outlook for top executives. (AI image)
Donald Trump's tariffs are being seen as a competitive positive by Indian firms. Leaders of major Indian companies such as Dixon Technologies, Tata Consumer Products, Blue Star, Havells and Arvind have informed analysts that Indian enterprises hold an advantageous position regarding US tariffs, with most receiving increased business enquiries from their American associates.
The executives indicated that the ongoing discussions about the India-US bilateral trade agreement (BTA) will boost commercial activities.
Despite Trump's demand for local production and threat of 25% tariff on mobile phone manufacturers like Apple and Samsung, industry analysts suggest that manufacturing in India for export remains more economical.
The reduction of US tariffs on China from 145% to 30%, compared to India's currently suspended 26%, presents a positive outlook for top executives.
India faces only a 10% US tariff at present, though the 26% rate might resume in July.
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During a recent earnings call, Dixon managing director Atul Lall announced a 50% capacity expansion for their primary customer to fulfil growing orders, predominantly for North American exports, considering the current geopolitical situation. He noted that production for a major US brand, through Compal partnership, would increase "with potential opportunities for exports."
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Although Lall did not name specific brands, analysts identified Motorola as their primary customer exporting mobile phones to the US, while the US brand mentioned is Google's Pixel.
Last month, ET had reported Google's intentions to export mobile phones from India.
Arvind's vice chairman Punit Lalbhai acknowledged that some 'strategic customers' experienced increased costs, which the company partially absorbed, potentially affecting margins in Q1 and Q2.
Nevertheless, Lalbhai noted an increase in order volumes from American clients.
He expressed confidence that margins would stabilise, with benefits becoming apparent in the latter half of the financial year, supported by strong demand. "This year we should add significant garment volume growth over last year in the textile space. Many of our capacities that we've been investing in are now coming on stream...temporary margin headwinds, but very optimistic growth and demand outlook," he said.
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In its presentation to investors, Gokaldas Exports highlighted that elevated Chinese tariffs and Bangladesh's political instability enhance India's appeal as a sourcing hub, despite temporary setbacks.
Tata Consumer Products' CEO Sunil D'Souza noted that for their US-bound exports like coffee and tea, which aren't locally produced there, the competitive landscape remains balanced for all players.
The first shipment of India-manufactured air conditioners from Havells has reached the US, with management expressing confidence in India benefiting from the US BTA. Leaders at BlueStar and Amber Enterprises report significant export interest as businesses prepare for potential tariff changes.
R Kuruvilla Markose, Titan Company's international business CEO, indicated they are monitoring US price competition and anticipates swift BTA implementation.
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