MUMBAI: US President Donald Trump’s sweeping reciprocal tariffs, introduced on April 2 beneath what he termed ‘Liberation Day’, have despatched ripples by international markets, with India among the many affected nations. Trump’s tariff measures embrace a 27% reciprocal tariff on Indian imports — half the speed the US claims India imposes on American items. Moreover, a 25% tariff has been levied on auto imports, additional complicating commerce relations.
Information of tariff hikes introduced by US President Donald Trump is seen on a show display screen on the facade of the Bombay Inventory Trade constructing in Mumbai (AP)
Regardless of lingering issues, Indian analysts consider the affect on the nation’s financial system will probably be manageable. In response to Hemant Jain, president of the PHD Chamber of Commerce and Business (PHDCCI), India’s ‘price competitiveness’ and ‘supportive government policies’ will assist take in the tariff affect. PHDCCI estimates that the general affect of the tariffs on India’s GDP will probably be a mere 0.1%.
Car trade in focus
The US tariffs have important implications for the Indian car sector, significantly automakers and part suppliers. Nevertheless, the 25% tariff on auto imports had already been introduced beneath Part 232 in March and doesn’t kind a part of the most recent 27% tariff bundle.
Additionally Learn: India rigorously analyzing implications of Trump’s tariffs
Sanket Kelaskar, Analyst – Institutional Fairness at Ashika Group, identified that the North American market constitutes 32% of Tata Motors-owned Jaguar Land Rover’s (JLR) volumes in 9MFY25, up from 25% a 12 months in the past. “The 25% tariff could force JLR to either hike prices or cut costs to maintain margins. Given its premium positioning, JLR may have some resilience, but near-term volume pressure is expected.”
Equally, Royal Enfield, which holds an 8% share of the US mid-size bike market, might even see moderation of export development. “The Super Meteor 650 ($7,999) is still cheaper than Harley-Davidson Iron 883 ($9,999), which offers some pricing cushion. However, the tariff could moderate export growth in the U.S,” stated Kelaskar.
Auto part suppliers, which derive round 30% of their income from exports, with the US accounting for roughly a 3rd of that, might additionally really feel the pinch. “Auto components may be subject to tariffs from May 3, but confirmation is still pending. If imposed, this could impact major Indian suppliers like Samvardhana Motherson, Sona BLW, and Bharat Forge,” he stated.
Broader financial implications
Aside from vehicles, different sectors resembling textiles, prescribed drugs, and electronics may face headwinds.
Bajaj Broking Analysis famous that the tariff announcement has already led to foreign money fluctuations, with the Indian rupee depreciating within the non-deliverable ahead (NDF) market.
The Federation of Indian Export Organisations (FIEO) expressed concern that increased tariffs might make Indian items much less aggressive within the US market. Nevertheless, Jain of PHDCCI remained optimistic.
“India’s robust industrial competitiveness will balance the impact of US tariff announcements and GDP will see only a 0.1% impact in the short term. However, in the medium term as the policy takes full effect, this shortfall will be negated,” he acknowledged.
Diplomatic efforts and future commerce relations
Whereas the tariffs pose rapid challenges, analysts consider they may immediate a re-evaluation of world provide chains. “The US manufacturing wage is nearly ten times that of India, making it difficult to completely shift production. A revision of tariffs remains a possibility,” Kelaskar noticed.
This view was additionally highlighted in a report revealed by the multinational funding financial institution UBS.
“In our base case (to which we assign a 50% probability), we would expect tariffs to be reduced from the levels announced by the President. The President himself invited negotiations, and Treasury Secretary Bessent said in a Bloomberg interview that the announced tariffs are “the high end of the number” and that nations might take steps to convey tariffs down,” stated a UBS report, including that this course of might take time.
Wanting forward, Jain burdened the significance of continued collaboration with the US. “Given India’s sustained economic development and strategic importance, we expect negotiations towards a well-negotiated bilateral trade agreement,” he stated.