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Economic Times
2 hours ago
- Business
- Economic Times
How will Trump's 25% tariffs affect India's key sectors?
Indian markets reacted negatively to US tariffs. Donald Trump imposed 25% tariffs on India. Most sectoral indices closed lower. Textiles, automobiles, oil & gas, and pharmaceuticals are likely to be affected. Textile stocks could face pressure. There is ambiguity on the auto sector impact. Oil & gas sector also faced a drop. Pharma sector also declined due to the tariffs. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Mumbai: All sectoral indices, except FMCG and media, closed lower on Thursday as investor sentiment turned sour after US President Donald Trump announced 25% tariffs on India effective on August 1 along with additional non-tariff penalties for buying crude oil from sectors like textiles, automobiles, oil & gas and pharmaceuticals are likely to be more susceptible to the adverse impact of tariff imposition. A look at what's in store for the sectors that are expected to bear the brunt of the tariffs:Textile stocks could remain under pressure as the sector will be among the most impacted by the tariffs given that US is its biggest market."Margins are expected to take a hit till global trade stabilises," said Prerna Jhunjhunwala,VP equity research, textile and retail, Elara Capital. Vardhman Textiles and Kitex Garments tumbled 5% each while Gokaldas Exports dropped 4.5% on Thursday. Indo Count Industries and Welspun Living shed 4% each. "Textiles and gems and jewellery stocks are expected to see the most adverse impact due to their high dependence on the US," said Sunny Agrawal, head of Fundamental Equity Research, SBICAPS said there is some ambiguity on the impact of tariffs on the auto sector since it was already subjected to 25% tariffs in the earlier round of tariff imposition."While domestic focused auto companies are not expected to see major impact, companies which have a high exposure to the US markets are likely to witness impact, but the extent of impact is unclear," said Nifty Auto Index shed as much as 1.5% during the day but erased some of the losses and closed 0.4% lower. Balkrishna Industries fell 2.8% and Bharat Forge declined 2.3%. Exide industries, Samvardhana Motherson International and MRF Ltd closed over 1% lower. Emkay Global said auto is better placed than feared (as India barely exports vehicles to the US, while auto components may eventually benefit from tariffs on China, Canada, and Mexico).The Nifty oil & gas index dropped 1.5% on Thursday with 14 out of 15 stocks on the index ending lower. Mahanagar Gas tumbled 4.1% while Adani Total Gas and Gujarat State Petronet slid 3.4% and 2.8%, respectively."Investors are beginning to build in the impact of supply constraints due to the US sanctions on Russia for crude oil purchases by China and India and the non-tariff penalties for buying crude oil from Russia on India," said Swarnendu Bhushan, co-head - Institutional Research, Prabhudas Lilladher. "This could drive up crude oil prices and result in lower gross marketing margins for oil marketing companies." IOC, Hindustan Petroleum, GAIL India Oil India and Bharat Petroleum Corporation moved between 1.5- 2.5% Pharma fell 1.3% and Nifty healthcare index dropped 1.1% on Thursday as US is the biggest market for domestic drugmakers. "In absence of overnight alternatives for generic drug makers, US is not likely to impose tariffs on pharma as healthcare cost in US would move up significantly," said Agrawal."Although US has allayed domestic manufacturing, there have been concerns on viability to produce and sell in the US."
Time of India
2 hours ago
- Automotive
- Time of India
How will Trump's 25% tariffs affect India's key sectors?
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Mumbai: All sectoral indices, except FMCG and media, closed lower on Thursday as investor sentiment turned sour after US President Donald Trump announced 25% tariffs on India effective on August 1 along with additional non-tariff penalties for buying crude oil from sectors like textiles, automobiles, oil & gas and pharmaceuticals are likely to be more susceptible to the adverse impact of tariff imposition. A look at what's in store for the sectors that are expected to bear the brunt of the tariffs:Textile stocks could remain under pressure as the sector will be among the most impacted by the tariffs given that US is its biggest market."Margins are expected to take a hit till global trade stabilises," said Prerna Jhunjhunwala,VP equity research, textile and retail, Elara Capital. Vardhman Textiles and Kitex Garments tumbled 5% each while Gokaldas Exports dropped 4.5% on Thursday. Indo Count Industries and Welspun Living shed 4% each. "Textiles and gems and jewellery stocks are expected to see the most adverse impact due to their high dependence on the US," said Sunny Agrawal, head of Fundamental Equity Research, SBICAPS said there is some ambiguity on the impact of tariffs on the auto sector since it was already subjected to 25% tariffs in the earlier round of tariff imposition."While domestic focused auto companies are not expected to see major impact, companies which have a high exposure to the US markets are likely to witness impact, but the extent of impact is unclear," said Nifty Auto Index shed as much as 1.5% during the day but erased some of the losses and closed 0.4% lower. Balkrishna Industries fell 2.8% and Bharat Forge declined 2.3%. Exide industries, Samvardhana Motherson International and MRF Ltd closed over 1% lower. Emkay Global said auto is better placed than feared (as India barely exports vehicles to the US, while auto components may eventually benefit from tariffs on China, Canada, and Mexico).The Nifty oil & gas index dropped 1.5% on Thursday with 14 out of 15 stocks on the index ending lower. Mahanagar Gas tumbled 4.1% while Adani Total Gas and Gujarat State Petronet slid 3.4% and 2.8%, respectively."Investors are beginning to build in the impact of supply constraints due to the US sanctions on Russia for crude oil purchases by China and India and the non-tariff penalties for buying crude oil from Russia on India," said Swarnendu Bhushan, co-head - Institutional Research, Prabhudas Lilladher. "This could drive up crude oil prices and result in lower gross marketing margins for oil marketing companies." IOC, Hindustan Petroleum, GAIL India Oil India and Bharat Petroleum Corporation moved between 1.5- 2.5% Pharma fell 1.3% and Nifty healthcare index dropped 1.1% on Thursday as US is the biggest market for domestic drugmakers. "In absence of overnight alternatives for generic drug makers, US is not likely to impose tariffs on pharma as healthcare cost in US would move up significantly," said Agrawal."Although US has allayed domestic manufacturing, there have been concerns on viability to produce and sell in the US."
Time of India
a day ago
- Business
- Time of India
Pharma exporters expect Trump to act benevolently to them
Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Mumbai: Large Indian drug makers, some of which get as much as half their revenue from the US market, may have to work out options to pass on the impact of the tariff that Washington announced Wednesday. However, analysts and industry insiders said the pharma sector may be exempted or the quantum of tariff on it will be Donald Trump said imports from India would face a 25% reciprocal tariff, effective Friday. There will also be an unspecified penalty for continued import of Russian oil, he industry insiders said while the contours of the tariff announcement on India are not yet clear, a 25% tariff is 'steep' for a sector that operates on thin analysts and executives expect Trump to eventually lower the rate to the 10-15% level imposed on some countries in Europe and the UK, they are of the view that companies will be prompted to pass on the dominant share of the cost increase to the customer.'Twenty-five percent is not good for India. However, it looks like a temporary thing and once negotiation happens in bilateral talks between the two countries, it may come down to 10-15%,' said Bino Pathiparampil, head of research at Elara Capital. 'Companies will have to pass on the lion's share to customers.'Vishal Manchanda, pharma analyst at Systematix Group, said the US 'will have to exempt pharma and there will be a likely roll back'.The Indian government said it has 'taken note' of the US announcement and is studying its implications. It also said India and the US have been engaged in negotiations on concluding a fair, balanced and mutually beneficial trade experts said the pharma industry may be spared from or considered separately for the levy as supplies of generic drugs from India are key to keeping healthcare costs affordable in the US. A steep tariff on the sector could lead to drug shortages in certain critical areas such as antibiotics and cancer drugs. Also, it will lead to cost increases that may eventually have to be passed through to the consumer or absorbed by insurance market has been expecting a 10% tariff on pharma imports from India. Even if half of that is passed on to patients or absorbed by insurers, still large Indian pharma companies may face a 3-5% impact on their earnings in fiscal 2027, according to sector analysts and industry Mishra, partner and tax controversy management leader at Grant Thornton Bharat, said the US announcement has not specified any tariff on pharma. 'However, the strong language used by President Trump and ongoing investigations into drug imports mean that the risk is not over yet,' Mishra said. 'Indian pharma companies should stay prepared for possible changes, especially if sector-specific duties are introduced later.'Pharma companies are closely watching the developments around tariffs.A potential US tariff on the pharma sector is a significant 'unknown' and will be one of the key developments for Dr Reddy's Laboratories to watch over the next few quarters, chief executive officer Erez Israeli told ET Vohra, managing director and global chief executive at Cipla , told ET last week that he does not see potential tariffs having a 'debilitating effect'. There will be an impact, but it will not derail the business, he had generic drug makers and contract manufacturing organisations such as Dr Reddy's, Zydus Lifesciences Sun Pharma and Cipla, have a big share of their revenue coming from the US is a major supplier of generic medicines to the US market. India exports about $9 billion worth of formulation in value terms to the US, but accounts for 40% of the medicines consumed in that market. In comparison, the European Union has just a single-digit percentage of the market, exporting $140-150 billion of officials are hopeful that Trump will consider a roll back for the pharma sector as it could lead to many negative repercussions for the US.'They may have to roll it back or lower it to 10%,' said a pharma industry executive. 'India and the US have a strong relationship. The US government will perhaps reconsider and work out a balance,' the person said.
Economic Times
a day ago
- Business
- Economic Times
Pharma exporters expect Trump to act benevolently to them
Mumbai: Large Indian drug makers, some of which get as much as half their revenue from the US market, may have to work out options to pass on the impact of the tariff that Washington announced Wednesday. However, analysts and industry insiders said the pharma sector may be exempted or the quantum of tariff on it will be Donald Trump said imports from India would face a 25% reciprocal tariff, effective Friday. There will also be an unspecified penalty for continued import of Russian oil, he industry insiders said while the contours of the tariff announcement on India are not yet clear, a 25% tariff is 'steep' for a sector that operates on thin analysts and executives expect Trump to eventually lower the rate to the 10-15% level imposed on some countries in Europe and the UK, they are of the view that companies will be prompted to pass on the dominant share of the cost increase to the customer.'Twenty-five percent is not good for India. However, it looks like a temporary thing and once negotiation happens in bilateral talks between the two countries, it may come down to 10-15%,' said Bino Pathiparampil, head of research at Elara Capital. 'Companies will have to pass on the lion's share to customers.' Vishal Manchanda, pharma analyst at Systematix Group, said the US 'will have to exempt pharma and there will be a likely roll back'.The Indian government said it has 'taken note' of the US announcement and is studying its implications. It also said India and the US have been engaged in negotiations on concluding a fair, balanced and mutually beneficial trade experts said the pharma industry may be spared from or considered separately for the levy as supplies of generic drugs from India are key to keeping healthcare costs affordable in the US. A steep tariff on the sector could lead to drug shortages in certain critical areas such as antibiotics and cancer drugs. Also, it will lead to cost increases that may eventually have to be passed through to the consumer or absorbed by insurance market has been expecting a 10% tariff on pharma imports from India. Even if half of that is passed on to patients or absorbed by insurers, still large Indian pharma companies may face a 3-5% impact on their earnings in fiscal 2027, according to sector analysts and industry Mishra, partner and tax controversy management leader at Grant Thornton Bharat, said the US announcement has not specified any tariff on pharma. 'However, the strong language used by President Trump and ongoing investigations into drug imports mean that the risk is not over yet,' Mishra said. 'Indian pharma companies should stay prepared for possible changes, especially if sector-specific duties are introduced later.'Pharma companies are closely watching the developments around tariffs.A potential US tariff on the pharma sector is a significant 'unknown' and will be one of the key developments for Dr Reddy's Laboratories to watch over the next few quarters, chief executive officer Erez Israeli told ET recently. Umang Vohra, managing director and global chief executive at Cipla, told ET last week that he does not see potential tariffs having a 'debilitating effect'. There will be an impact, but it will not derail the business, he had said. Large generic drug makers and contract manufacturing organisations such as Dr Reddy's, Zydus Lifesciences, Lupin, Gland Pharma, Biocon, Sun Pharma and Cipla, have a big share of their revenue coming from the US market. India is a major supplier of generic medicines to the US market. India exports about $9 billion worth of formulation in value terms to the US, but accounts for 40% of the medicines consumed in that market. In comparison, the European Union has just a single-digit percentage of the market, exporting $140-150 billion of officials are hopeful that Trump will consider a roll back for the pharma sector as it could lead to many negative repercussions for the US.'They may have to roll it back or lower it to 10%,' said a pharma industry executive. 'India and the US have a strong relationship. The US government will perhaps reconsider and work out a balance,' the person said.
Mint
a day ago
- Business
- Mint
US tariffs cloud outlook for Indian exports, trigger growth concerns
New Delhi: The US' imposition of a 25% tariff on Indian exports starting 1 August has cast a shadow over bilateral trade, creating fresh uncertainty for exporters. In addition, uncertainty over a potential penalty, tied to oil and defence purchases from Russia, may cloud pricing strategies and disrupt supply chain planning, making it harder to estimate landed costs. This was set to weigh on short-term business sentiment, analysts said. "Without clarity on the quantum of the penalty, Indian exporters and the US importers are left with no firm basis to calculate landed costs or assess how the tariff burden can be absorbed," said Ajay Sahai, director general and chief executive officer (CEO) at the Federation of Indian Export Organisations (FIEO). "This ambiguity disrupts supply chain planning and pricing strategies," he added. President Donald Trump, in a post on his Truth Social platform on Wednesday announced that Indian exports to the US will face a 25% tariff starting 1 August, along with additional penalty for buying oil and military equipment from US-sanctioned Russia. He, however, didn't elaborate on the additional tariffs. Citing high Indian tariffs, "obnoxious" non-monetary trade barriers, and New Delhi's continued defence and energy ties with Russia, Trump said the move was necessary to address America's 'massive trade deficit' with India. 'While India is our friend, we have... done relatively little business with them,' he added. The US is not only India's largest trading partner, but also one of the few major economies with which India enjoys a significant trade surplus. India's goods trade surplus with the US rose to $41.18 billion in fiscal year 2025 (FY25), up 16.6% from $35.33 billion a year ago. The increase was driven by an 11.6% rise in exports to $86.51 billion, while imports from the US grew 7.4% to $45.33 billion. In comparison, India's overall goods trade reported a deficit of $282.8 billion in FY25. Some economists flagged the development as a setback for India, noting that rival economies in Southeast Asia face lower duties despite operating in similar segments such as labour-intensive goods and electronics. Under Trump's new tariff regime, Vietnam was initially hit with a 46% duty due to its widening trade surplus with the US, but Trump later clarified that most Vietnamese exports would face tariffs below 20%, while transshipped goods from third countries would attract a 40% levy. Indonesia's proposed 32% tariff was trimmed to 19% by mid-July, and the Philippines' 20% duty was similarly eased to around 19% amid early bilateral talks. "The 25% tariff rate is certainly a negative development as it compares to lower rates for peers such as Vietnam, Indonesia and the Philippines, which compete with India in a similar category of labour-intensive products and electronic goods," said Garima Kapoor, economist and executive vice president at Elara Capital. Kapoor noted that while the exact tariff structure on exempted items like pharmaceuticals and sectors with differential rates—such as iron, steel and autos—remains unclear, any inclusion of pharma under the new regime would be a significant setback for India, given that over 30% of its pharma exports go to the US. However, even amid the turbulence, with talks on a bilateral trade agreement (BTA) gaining traction, the tariff setback could be temporary. "A well-negotiated deal that addresses all aspects of trade, investment and tariff and non-tariff barriers by September-October 2025 is likely to yield long-term benefits rather than a hurried deal," she added. Madan Sabnavis, chief economist at Bank of Baroda, said a 25% tariff, excluding the penalty component, is not very different from April levels, when the tariffs were first announced by Trump, but will still put pressure on Indian exporters. "At this stage, some depreciation may be appropriate to support exports. Overall growth can be affected, and our forecast of 6.4%-6.6% holds even now with the most negative impact leaving to 6.4%," he added. India's GDP growth for FY26 is projected to remain strong, with the Reserve Bank of India (RBI) forecasting 6.5%, slightly down from earlier estimates due to global trade risks. The ministry of finance expects growth at 6.3%-6.8%, supported by structural reforms and stable macro fundamentals. The International Monetary Fund (IMF) recently raised its forecast to 6.4%, citing easing trade tensions and resilient domestic demand. While the outlooks remain optimistic, these institutions flagged external risks as key downsides. Some agencies downgraded India's economic growth forecast for FY26 following rising external challenges. Rating agency ICRA Ltd downgraded India's growth forecast for FY26 to 6.2% from 6.5% last month on the back of external factors impacting the country's growth. The agency's chief economist, Aditi Nayar, said the tariff and penalty imposed by the US on Wednesday is higher than anticipated and is likely to pose further headwind to India's GDP growth. "The extent of the downside will depend on the size of the penalties imposed," she added.
