India may gain in garmenting and low-end engineering as Trump Tariffs drive global supply chain reset: Prashant Khemka

Khemka pointed out that sectors like IT services, while not directly impacted by tariffs, could face a second-order effect from slower US growth.

India could be a relative gainer from the US's new tariff regime, especially in labour-intensive sectors such as garmenting, low-end engineering goods, and select ancillaries, says Prashant Khemka, founder of White Oak Capital Management.

“The kinds of industries where India would benefit are those where manual or low-skilled labour is a high component of the bill of materials,” he said, citing garmenting as a prime example. “It would be difficult to make such products onshore in the US anytime soon.”

The shift is part of a broader supply chain churn triggered by the US’s trade actions against China, which are likely to force manufacturers to look for alternatives. “Where India was at a disadvantage compared to some of these other countries, it would become more competitive,” Khemka said.

Khemka pointed out that sectors like IT services, while not directly impacted by tariffs, could face a second-order effect from slower US growth. “If there's a slowdown in corporate earnings and banking in the US—which represents about 40% of Indian IT services business—it will constrain IT spending,” he explained.
He was cautious on capital-intensive sectors, like automobiles, where production could shift back to the US. “A highly automated automobile plant is more likely to move back onshore. That’s not an area India plays in, but others would see greater losses,” he said.

Defence: A longer-term opportunity

Khemka is also optimistic about India's role in the evolving global defence landscape, especially as Western nations increase spending in the wake of diminished US support under Donald Trump. “What Trump has made clear to Europe is: you are on your own. We are no longer the big brother who will have a protective arm around you,” he said, adding that countries like Germany and Japan are likely to scale up their own defence capabilities.
While India may not immediately supply high-end tech, it can still participate meaningfully. “There could be arms and ammunition, where India is very capable of producing competitively,” he said.