Exporters’ Shares Slump on US Warning of Higher Tariffs
Agencies report that on April 2, Trump first imposed a 26% reciprocal tariff on Indian exports, escalating to 50% by the end of August. This regulatory shift has sent shockwaves through the market, causing Indian exporters’ shares to plummet following Donald Trump’s recent backing of a Bill that would permit the US to impose astonishing tariffs of up to 500% on Indian imports. The potential approval of this Bill could add significant stress on top of the existing 50% tariffs, further escalating the burden on importers.
Impact on Export-Dependent Sectors
Shares within key export sectors are reeling from this development, particularly affecting:
– Textiles and Apparel:
– Gokaldas Exports: Decline of 2-8%
– KPR Mill: Decline of 2-8%
– Vardhman Textiles: Decline of 2-8%
– Welspun Living: Decline of 2-8%
– Seafood:
– Avanti Feeds: Decline of 2-8%
– Apex Frozen Foods: Decline of 2-8%
– Coastal Corporation: Decline of 2-8%
– Pharmaceuticals (currently exempt from tariffs):
– Dr. Reddy’s Laboratories: Decline of 1-3%
– Torrent Pharmaceuticals: Decline of 1-3%
– Sun Pharmaceutical: Decline of 1-3%
Siddhartha Khemka, head of research at Motilal Oswal Financial Services, stated, “There is limited near-term clarity on the potential imposition of additional tariffs by Donald Trump, which has weighed on expectations surrounding a US-India trade deal and may disrupt trade flows.”
The Sanctioning Russia Act of 2025
The proposed Bill aims to penalize countries like India and China for purchasing cheaper Russian oil. Under the Sanctioning Russia Act of 2025, the President would be mandated to raise the duty on all goods imported from nations engaged in trading Russian-origin uranium and petroleum products to at least 500% of their value.
Key Investor Insights
The recent Bill has dampened hopes for a trade agreement between New Delhi and Washington, a deal that many anticipated would boost investor sentiment in Indian equities. Trump’s initial tariff imposition has kept Indian stocks under pressure, with ongoing uncertainty regarding the implications for exporters.
Khemka suggests that retail investors exercise caution when approaching export-oriented sectors until there is more clarity. “For sectors not impacted by tariffs, like pharmaceuticals and IT, it may be wise to buy on declines with a long-term perspective as the market stabilizes,” he added. He also emphasized a strategic focus on domestic-facing companies under the current conditions.
Amit Khurana, head of equities at Dolat Capital Markets, advised retail investors to remain vigilant regarding export-oriented sectors due to the volatility and unpredictability in markets. “We recommend waiting for clearer insights on which sectors might face tariffs and which might be exempt. In the meantime, investors could consider prioritizing companies with a domestic focus.”
Conclusion
The looming specter of higher tariffs continues to unsettle Indian exporters and stokes uncertainty in the market. As chaos brews amid regulatory changes, a cautious, informed approach will be crucial for investors seeking security in their portfolios. This situation underlines the importance of staying updated on developments relating to US tariffs on Indian imports and their far-reaching impacts on exporters.