The U.S. President has slapped a reciprocal tariff rate of 26% imposed on goods exported by India to the U.S. The announcement was made during the “Liberation Day” address on April 2, 2025, triggering economic debates and market reactions globally. The quantum of tariffs on India was based on cumulative tariffs imposed by a country on American goods. Potus has also announced his contemplation to form universal baseline tariffs of 10%, along with the tariffs announced. Meanwhile, country-specific reciprocal tariffs will reportedly replace the baseline tariffs starting April 9, 2025.
While it has come as a massive relief for India’s high-value exports in IT services and Pharmaceuticals (as of now), the levies will compel India to give in, prompting duty reduction on U.S. farm products and stripping away licensing requirements and import restrictions. Meanwhile, a few questions linger: Are Indian sectors spooked by the tariff juggernaut? Which sectors are big winners and losers?
The IT sector may be unperturbed by the Thursday Tariff; however, apprehension surrounding inflation and reduced tech spending in the U.S. have seemingly kept companies on tenterhooks. The discounted reciprocal tariff saw IT stocks dip up to 7.5% in Thursday’s early trade, while the shares of HCL Technologies, Wipro and Infosys slipped between 3%-3.5%. Along with macroeconomic headwinds, the tariff tussle will accentuate the fear of a stagflation at best and a recession at worst. As of April 7, 2025, the IT sector is in red, with Nifty IT index tumbling nearly 6%.
Amidst the global economy in the doldrums, IT services appear phlegmatic against the backdrop of bullish demand for AI, enterprise tech solutions, cybersecurity and flourishing U.S.-India partnership. Predominantly, India’s IT service industry accounted for US$ 205.2 billion in exports in FY24. Grand View Research’s estimate corroborates the bullishness as it expects the India IT services market to garner US$ 166.4 billion by 2030, with the U.S. poised to be a happy hunting ground based on revenue.
President Trump sent Indian pharmaceutical giants scrambling after he asserted on Friday, April 4, 2025, that tariffs on the industry were imminent. Meanwhile, the White House had exempted imports of pharmaceuticals mentioned in the fact sheet on April 2, 2025. Indian pharmaceutical industry is on a “wait and watch” mode as the temporary exemption provides a sigh of relief; however, critics say it might be calm before the storm as more than US$ 5 trillion was wiped off Wall Street (in two days till Friday, April 4, 2025) following the painful dose of tariffs.
Speed bumps would be rare as automobiles are not included in this order; they are subject to Section 232 tariffs at 25 percent, according to Trump’s order on March 26, 2025. As such, the Society of Indian Automobile Manufacturers (SIAM) envisages limited impact on autos, auto parts and steel and aluminum articles. That said, the luxury carmaker Tata Motors may grapple with an indirect impact as the group may have to resort to price hikes or cost-cutting measures for Jaguar Land Rover, which accounted for 32% of the U.S. sales volume in the first 9 months of FY 2025, Business Standards quoted an analyst from Institutional Equity, Ashika Group. It is to be noted that Jaguar Land Rover is no longer a subsidiary of Tata Motors, although it is still part of the Tata Group.
Royal Enfield, an Indian OEM with a notable share in the U.S. market, may have to face the brunt, along with Bharat Forge and Sona Comstar. Amidst the tariff Tsunami, the Automotive Component Manufacturers Association of India (ACMA) expressed hope that ongoing bilateral negotiations between India and the U.S. would lead to a balanced resolution benefiting both economies and the automotive market.
The diamond industry of India ships the lion’s share of its exports to the U.S.; experts warn U.S. tariffs could paralyze the market, denting thousands of jobs. The diamond hub in Surat reportedly polishes over 80% of the world’s rough diamonds—India contributes nine out of ten diamonds processed globally. The jury is out on whether the situation is worse or at par with the 2008 economic turmoil (financial crisis). According to the Gem & Jewellery Export Promotion Council (GJEPC), the U.S. accounts for US$ 10 billion of diamond and jewelry exports. The estimated USD 124.70 billion jewelry market (by 2030) could be bracing for a dip in exports as U.S. tariff continues to shiver industries amidst uncertainty.
Policymakers are on the fence as despite India’s deliberation to reduce duties on pulses, pecans and non-genetically modified soybeans, the U.S. tariff hangs like a sword of Damocles. India is not merely feeding 1.4 billion people; it is one of the world’s largest exporters of agricultural produce. Since agriculture is a politically sensitive sector in India, New Delhi could weigh U.S. demands. For the record, Vietnam has apparently succumbed to the tariff pressure following the imposition of a massive 46% duty on goods from the country. The Southeast nation has allegedly agreed to reduce its tariffs on U.S. imports to zero.
The agtech sector, precisely—companies in agriculture IoT—are goosey about the rise in the cost of supplies to the U.S. Farmers may abstain from investing in technology, innovation and machinery. Prominently, nearly 50% of India’s workforce is employed in agriculture; the South Asian giant mainly exports rice, honey, shrimp, black pepper, castor oil and vegetable extracts. Media reports suggest the Indian government is meticulously negotiating a resolution with the U.S. to protect domestic interest.
“The Bilateral Trade Agreement” (part of Mission 500) is expected to be finalized by September-November 2025. The two countries aim to bolster bilateral trade to US$ 500 billion by 2030 and maintain trade competitiveness.
The ripple effect of the tariff has become palpable in electronic materials as GTRI expects India’s export to the U.S. (from sectors such as electrical, electronics, gold and marine items) to plunge by US$ 5.76 billion in 2025 on the back of increased U.S. duties. In essence, India exported nearly US$ 10 billion worth of electrical and electronic equipment to the U.S. in 2023, according to Trading Economics.
In the midst of the tariff sword, the India Electronics and Semiconductor Association (IESA) is optimistic and was cited by the Economic Times, stating that India would remain competitive given that China, Taiwan, Vietnam and Thailand grapple with higher tariffs. The think tank believes India’s low electronic imports (from the U.S.) will provide “room for tariff adjustments” to maintain the trade balance.
The reciprocal tariff storm of 26% has kept the industry for electronic materials and chemicals on the edge. The chemical industry (barring pharmaceuticals) may witness a shrink in the demand for intermediates and specialty chemicals. To reiterate, lower tariffs vis-à-vis China, Vietnam and Bangladesh could provide opportunities for Indian chemical companies in the United States.
There is no denying that stiff challenges lurk for gems and jewelry, automotive and agriculture; India’s audacious push for a bilateral trade agreement with the U.S. illuminates opportunities. Industries will potentially not press the panic button as India looks to boost the ease of doing business, invest in deep tech, logistics and infrastructure and innovations.
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