Looming concerns around the upcoming ‘reciprocal tariffs’ by US President Trump has kept several sectors on the edge, ranging from automotive to pharma, and sparking fears of a wider trade war, and prompting businesses and investors to assess the impact on specific companies.
The big question remains: Which sectors will bear the brunt, which will weather the storm, and where does opportunity lie?
After Autos, Concerns for Pharma
Pharmaceuticals has been a sector where India has had dominant power, in terms of exports. Kranti Bathini, Director of Equity strategy at WealthMills Securities is confident that this is unlikely to be disrupted, and said that Dr Reddy’s and Divi’s Laboratories will be among the key players to watch. "The majority of India’s pharma exports go to the US, so the sector will see some knee-jerk reactions. But let’s be clear, India is one of the best pharma destinations, and overnight disruption isn’t happening."
The US imposes almost zero duties on pharmaceutical imports, while India charges around 10% on pharma imports from the US, which has led to industry bodies raise concerns about a potential impact of reciprocal tariffs. "We are concerned that distributors and generic manufacturers cannot absorb the rising costs of broad tariffs," the Healthcare Distribution Alliance (HDA) said.
Mehul Sheth, Research Analyst at HDFC Securities said, “Most of the Indian pharma companies are working on thin margins in the US market, ranging 5-20% and tariff absorption could lead to impact on the margin. The way out for Indian pharma companies to be selective in marketed product portfolio and to take exit from low margin product basket.”
Stocks in Focus: Sun Pharmaceuticals is among the leading Indian players in the US, while for Cipla, North America contributes around $200 billion of revenue, while Lupin has ongoing projects worth over $200 billion in the US.
Read More: Moneycontrol Pro Panorama | US tariffs on autos put industry on edge
Gems & Jewellery - Rough Ride?
While India isn't the primary target of these tariffs, the jewellery segment is significant in terms of trade volume, making it vulnerable to any disruptions.
“Apart from concerns around service exports, gems and jewellery form a bulk of our exports. India might seem like the first target but there’s also Europe appearing to be a bigger concern for the US as they try to tackle tariffs," said WealthMills’ Bathini, adding that one major factor in India's favour is the crucial role that domestic suppliers play in the global supply chain.
Stocks in Focus: Malabar Gold and Diamond, Renaissance Jewellery and Rajesh Exports have significant number of stores in the US, while Kalyan Jewellers has recently begun expansion across the region.
EMS - Indirect Impact?
Market veteran and independent analyst Ajay Bagga has said that the tariff war would create global supply chain disruptions. Amid looming tensions, Indian electronics manufacturing services (EMS) companies are already in talks with global supply chain players - primarily Chinese companies - to establish joint ventures and strategic partnerships. Meanwhile, the government is in process of finalising a Rs 25,000 crore incentive scheme for domestic manufacturing.
Stocks in Focus: Dixon Technologies is targeting expansion of its US exports to $100 billion, while Kaynes Tech aspires to capitalize on the US market as a key region to achieve its Rs 4,500 crore revenue target for FY26.
Metals May Not See a Direct Hit
Ravi Sodah, Equity Analyst with Elara Capital said that the metals sector has so far brushed off concerns about a direct impact. "India has never had a meaningful export market for metals in the US," he said, however, knock-on effect could come from Canada, redirecting supply into other markets, including India.
Steel and aluminium are likely to face indirect risks due to China’s excess capacity. If the US imposes protectionist measures and other countries retaliate, China may divert its surplus steel exports to India, leading to a supply glut and lower domestic prices. Thus, industry experts warn that without safeguard duties, India could become a dumping ground for Chinese steel.
Stocks in Focus: Hindalco is a major US exporter but its export volumes have decreased in recent years while Jindal Steel remains less reliant on exports.
Read More: Trump's Auto Tariffs - These Indian companies will feel the heat: Should you avoid?
IT Services – Keep an Eye on Client Spend
India’s IT sector, primarily service-driven, may escape a direct tariff hit, said Ajay Bagga, primarily due to its service-driven nature and with the brunt of the tariffs only playing out in the manufacturing space. But Krati Bathini of WealthMills has cautioned against assuming an immunity. “If trade tensions escalate, US client spending could come under strain, affecting companies like Infosys and TCS,” he said.
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