As the April 2 deadline for US reciprocal tariffs approaches, Indian businesses and investors are assessing the potential fallout. Sectors like automobiles, pharmaceuticals, gems & jewellery, and IT services are under scrutiny, with some facing higher risks than others.
Here’s a detailed breakdown of the most vulnerable industries, potential winners, and stocks to monitor amid the escalating trade tensions.
1. Pharmaceuticals: High Exposure but Resilience Expected
Key Insights:
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India supplies over 40% of generic drugs to the US, making pharma a critical export sector.
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Current tariffs: US imposes near-zero duties on pharma imports, while India charges ~10% on US-made drugs.
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Risk assessment: While tariffs could squeeze margins, complete disruption is unlikely due to India’s cost advantage.
Expert Opinions:
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Kranti Bathini (WealthMills Securities):
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“Indian pharma’s dominance in generics ensures long-term stability despite short-term volatility.”
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Mehul Sheth (HDFC Securities):
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“Companies may exit low-margin products to mitigate tariff impacts.”
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Stocks to Watch:
| Company | US Exposure |
|---|---|
| Sun Pharma | Leading player in US generics |
| Cipla | ~$200M revenue from North America |
| Lupin | $200M+ ongoing US projects |
2. Gems & Jewellery: A Vulnerable Export Giant
Key Insights:
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India exports ~$10B+ in gems & jewellery annually, with the US as a major buyer.
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Potential risk: If tariffs rise, profit margins could shrink for exporters.
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Silver lining: India’s role in the global supply chain may soften the blow.
Stocks to Watch:
| Company | US Presence |
|---|---|
| Rajesh Exports | Significant US retail footprint |
| Kalyan Jewellers | Expanding in North America |
| Malabar Gold | Strong export reliance on US |
3. Electronics Manufacturing (EMS): Indirect Risks, New Opportunities
Key Insights:
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US-China trade tensions are pushing global firms to diversify supply chains.
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India’s incentive schemes (e.g., PLI for electronics) could attract investments.
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Potential winners: Companies with US partnerships or expansion plans.
Stocks to Watch:
| Company | US Strategy |
|---|---|
| Dixon Tech | Targeting $100M+ US exports |
| Kaynes Tech | Eyeing US for FY26 revenue growth |
4. Metals: Limited Direct Impact, But Chinese Dumping Looms
Key Insights:
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Low US exposure: India’s metal exports to America are minimal.
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Indirect risk: If China diverts excess steel/aluminum to India, domestic prices may crash.
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Safeguard duties needed to prevent dumping.
Stocks to Monitor:
| Company | Export Reliance |
|---|---|
| Hindalco | Declining US shipments |
| Jindal Steel | Minimal dependence on exports |
5. IT Services: No Direct Tariffs, But Client Spending at Risk
Key Insights:
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No direct tariff threat (IT is service-based, not goods).
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Potential risk: If US firms cut budgets due to trade wars, Infosys, TCS, Wipro could see slower growth.
Expert Take:
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Ajay Bagga (Market Analyst):
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“IT may remain insulated unless trade tensions severely impact US corporate spending.”
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Final Outlook: How Should Investors Prepare?
High-Risk Sectors:
✅ Automobiles (Already hit by 25% tariffs)
✅ Gems & Jewellery (High export dependence)
Moderate-Risk Sectors:
⚠️ Pharma (Margins may shrink, but demand remains)
⚠️ Electronics (Opportunity if supply chains shift)
Low-Risk Sectors:
🛡️ IT Services (Minimal direct impact)
🛡️ Metals (Unless Chinese dumping occurs)
Strategic Moves:
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Diversify portfolios away from high-tariff sectors.
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Watch for policy shifts (India may negotiate concessions).
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Long-term bets on sectors with domestic demand resilience.
