While tariff uncertainty continues to keep investors on edge, there’s a silver lining, said Hiren Ved, Director and CIO at Alchemy Capital Management, who believes India is well positioned to make the most of it.
With US President Donald Trump pushing for reciprocal tariffs as a cornerstone of his economic agenda, many countries are on the defensive. But India, Ved points out, has taken a more pragmatic approach—choosing negotiation over confrontation.
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"We are the only country that’s been actively engaging with the US on a trade deal since the start of the Trump administration," Ved said. That measured diplomacy, coupled with relatively lower tariffs on Indian goods compared to peers like China, creates a rare window of opportunity for Indian exporters.
In fact, India’s manufacturers could gain meaningful market share, especially as the US imposes much higher tariffs on other Asian economies. "This is a chance for Indian companies to become more relevant in global trade flows," Ved said.
Lower oil prices are another unexpected boost. With global growth forecasts slowing, crude has corrected sharply—a net positive for India, which imports 85 percent of its oil. "Lower oil means lower inflation, and that helps contain the trade deficit," Ved noted.
But the road ahead isn’t without its bumps. A global slowdown could hit India’s export-oriented sectors. Rising tariffs may squeeze profit margins if buyers in the US demand shared burden. "How the impact gets split between the buyer and seller will depend on negotiations, pricing power, and availability of alternatives," Ved explained.
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And that brings the spotlight to specific sectors. Pharmaceuticals, IT services, and auto components are among the most exposed.
India holds a commanding position in the US generics market, supplying nearly 40 percent of all such drugs. "We’re incredibly competitive," Ved said, citing how it costs just 5 to 6 dollars to manufacture 1,000 tablets in India versus 35 to 40 dollars in the US. "That’s an 8x difference."
Pharma was excluded from the initial round of tariffs announced on April 2. But Trump has indicated that drug imports may be included in the future—an odd move, Ved argues, given that healthcare is one of the biggest cost burdens for US citizens, accounting for 17–18 percent of GDP.
If tariffs do come, India would still have an edge over China, where pharma imports attract 54 percent duties. Even at 26 percent, Indian drugs could remain price competitive.
IT services, while not under direct tariff pressure, could be hit by softer demand if the US economy slows. "Spending decisions may get delayed, and deal cycles could stretch out," Ved said. Meanwhile, a blanket 25 percent tariff on auto and auto components entering the US could weigh on Indian suppliers, even though direct car exports are limited.
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