The imposition of 25% tariff on India by the US will not have a major long-term impact on India and the Indian markets in particular as Indian exports to US are traditional in nature, including gems & jewellery, leather, textiles etc, says Shankar Sharma.
From a market perspective, it is a non-issue but could act as a catalyst at a time when the sentiments are already subdued due to the ongoing lacklustre earnings season.
“India exports nothing of great value to the US. It is all traditional exports like gems & jewellery, textile etc, which we have been doing for many years. I don’t think the 25 percent tariff will have a major long-term impact of any kind,” Sharma told Moneycontrol.
Also Read: Industry 'disappointed' as US Imposes 25% tariff on Indian goods
On Wednesday, US President Donald Trump announced a 25 percent tariff on Indian imports and an additional penalty effective from August 1. More importantly, the Indian tariff rate of 25 percent is higher than most other countries with which the US has reached an agreement -- European Union (15 percent), UK (10 percent), Indonesia (19 percent), Philippines (20 percent) and Vietnam (20 percent).
The Indian tariff rate, however, is less than the current 30 percent rate for China.
Meanwhile, Sharma is of the view that the US tariff development is a “non-issue” for the Indian markets, which are currently in the doldrums because of domestic factors.
“The Indian market in any case is not in a good position and it has nothing to do with US tariffs. It is more to do with the corporate earnings and other local factors. Indian market has not done well in the recent past and is among the worst performers globally when compared with other leading equity markets,” said Sharma.
Indeed, as since mid-December, Indian benchmarks Sensex and Nifty are the worst performing benchmarks among all leading global indices.
Since December 17, 2024, the Sensex and Nifty have each declined by nearly four percent, ranking them as the worst-performing among major global indices during this period. Only the Philippines Stock Exchange comes close with a decline of three percent.
In sharp contrast, South Korea’s Kospi surged by 35 percent, followed by Germany’s DAX and Hong Kong’s Hang Seng with gains of 30 percent and 26 percent, respectively. Other notable performers included France’s CAC, Brazil’s Ibovespa, and the UK’s FTSE 100, each posting an increase of approximately 17 percent.
“There could be some impact on the rupee. In the markets, the tariff news will have some impact on the sentiments but not a long-term earth-shattering one,” said Sharma.
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