Priyanka Tiwari
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As global markets remain jittery over tariff uncertainties, Hiren Ved, Director and CIO at Alchemy Capital Management, believes India is strategically placed to benefit, especially in contrast to peers like China.
Ved highlights India’s active diplomacy with the US since the beginning of the Trump administration as a key differentiator. Unlike confrontational approaches adopted by other economies, India has focused on negotiation, keeping its trade relations with the US relatively stable.
“We are the only country that’s been actively engaging with the US on a trade deal since the start of the Trump administration,” Ved noted.
Lower Tariffs and Oil Prices: A Competitive Edge
India’s relatively lower tariffs on exports make it a more attractive trade partner. As the US increases import duties on other Asian economies, Indian exporters could seize a larger global market share.
Meanwhile, falling crude oil prices serve as another economic advantage. With India importing 85% of its oil, lower prices help control inflation and narrow the trade deficit.
“Lower oil means lower inflation, and that helps contain the trade deficit,” Ved added.
Risks Remain Amid Global Slowdown
Despite these positives, Ved cautions that a global economic slowdown could dampen export momentum. Higher tariffs could lead to margin pressure, especially if US buyers push suppliers to absorb part of the cost increases.
“How the impact gets split between the buyer and seller will depend on negotiations, pricing power, and availability of alternatives,” he said.
Sector-Wise Outlook: Pharma, IT, and Auto Components in Focus
Pharmaceuticals remain a bright spot. India supplies nearly 40% of the US generics market, driven by massive cost advantages.
“It costs just $5 to $6 to manufacture 1,000 tablets in India versus $35 to $40 in the US,” Ved pointed out. “That’s an 8x difference.”
While Indian pharma was excluded from the initial US tariffs announced on April 2, any future inclusion could still leave India more competitive than China, where import duties on pharma reach 54%.
IT services, though not directly affected by tariffs, face demand-side risks if the US economy slows, with potential delays in deal closures and IT spending.
In the auto components space, a proposed 25% tariff on US imports could challenge Indian suppliers, even though direct car exports to the US are limited.
Read More: ICICI Bank Q4 & FY25 Results: Strong Growth, Healthy Outlook Says LKP Research
