Corporate India is bracing itself for a tough trade landscape following the 27% reciprocal tariffs recently imposed by the United States. While this move has been heralded by the Trump administration as a bold step towards economic independence, leaders in Indian industry are weighing the implications, recognizing both challenges and opportunities in this new climate.

Impact on Key Sectors

Several critical sectors, including gems and jewellery, automotive, and engineering goods, are likely to feel the sting of these elevated tariffs, which may hinder their competitiveness on a global scale. However, it’s not all bad news; certain industries have managed to dodge these tariffs for the time being. Notably, pharmaceuticals and energy products have been exempted, providing a buffer for those sectors. Furthermore, Indian electronics firms are poised to benefit as they outpace competitors from China and Vietnam amid these tariff adjustments.

Future of Electronics Trade

Pankaj Mohindroo, chairman of the India Cellular and Electronics Association (ICEA), emphasized that the future of India’s electronics trade with the US hinges on successfully negotiating a bilateral trade agreement (BTA). This agreement could serve as a pivotal moment for bolstering trade relations and enhancing market access.

Pharmaceutical Sector’s Resilience

Kiran Majumdar-Shaw, chair of Biocon Group, remarked that the exemption for pharmaceuticals highlights the sector’s vital role in ensuring public health. “The focus on making life-saving medications affordable and accessible aligns with the priorities shared by both nations,” she noted, signaling a positive outlook for the industry.

Challenges for Engineering and Jewellery

Conversely, sectors like engineering and gems and jewellery are grappling with the potential fallout of these tariffs. Pankaj Chadha, chairman of the Engineering Export Promotion Council (EEPC), stated that annual exports to the US total approximately $20 billion, and the new tariffs could lead to an estimated 20-25% decline in exports during the initial year.

Colin Shah, managing director of Kama Jewelry, expressed concern that the increased tariffs could significantly impact exports to the US, which serves as the sector’s largest market. “The tariff hike exceeded our expectations and will undoubtedly affect our sales overseas,” Shah warned, suggesting that manufacturers might need to explore alternative markets.

Looking Ahead

Sabyasachi Ray, executive director of the Gems & Jewellery Export Promotion Council (GJEPC), urged stakeholders to remain patient as discussions regarding the bilateral trade agreement progress. “We’ve communicated our concerns to the commerce ministry and are hopeful for a favorable resolution,” Ray stated, indicating that the industry is keenly monitoring developments.

Alkesh Shah, vice chairman of Goldstar Jewellery, forecasted a shift in focus for jewellers towards domestic sales rather than relying on exports due to the tariffs. “Remaining competitive will be challenging if other nations maintain lower tariffs. To mitigate losses, we may need to collaborate with the government to enhance domestic demand, which could prevent job losses,” Shah concluded.

As Corporate India navigates this evolving trade landscape, the focus will remain on adapting strategies and seeking opportunities amidst the challenges presented by the US tariffs.