Only hours left for the decision on tariffs; 6 regions of the country anxiously

 

 

Liberation Day.., the day when Trump said that he would impose tariffs on those countries at the same rate as he imposes tariffs on their products. Only a few hours are left for that crucial announcement. Trump's announcement is very important for India as it is one of the countries that imposes the highest tariffs on imports from the US. The average tariff imposed by India on the US is 9.5 percent. India exports the most to the US in pharma, diamonds, jewelry, automobiles, food products, etc. If tariffs are imposed on all these, India will lose $ 7 billion or Rs 60,000 crore annually. India exports almost twice as many products to the US as it imports from the US. Let's take a look at which sectors of India will be affected if the tariff is announced.

1. Gems and Jewelry

India is one of the largest exporters of gemstone jewelry to the US. If you want to import gold jewelry from the US to India, you have to pay a 20 percent duty. The US, on the other hand, currently charges only 5.5-7% duty on imports from India. India levies a 5% tax on cut and polished diamonds, while the US does not levy any duty on this. If the US imposes duties on Indian imports similar to the duties imposed by India on the US, it is likely to impose duties of 5% to 20% on gem and jewellery exports, which will be a setback for the sector that employs lakhs of workers. In the 2023-2024 financial year, India exported gems and jewellery worth $32.85 billion globally, of which 30.28% went to the US. This gem and jewellery is worth about Rs 86,000 crore.

2. Automobile sector
Trump had already announced a 25% tariff on auto imports. Tata Motors was the biggest setback in India due to President Trump's decision to impose duties on vehicles exported to the US. Although Tata does not directly export vehicles from India to the US, the US is a major market for Tata's subsidiary Jaguar Land Rover. The US accounts for 22 per cent of the company's total sales. Acer Motors also exports its two-wheeler Royal Enfield to the US. The decision has also hit Indian companies that export vehicle components to the US. Sona BLW Precision Forgings derives 66 per cent of its revenue from the US and Europe. Samvardhana Motherson International Limited is a company that exports components to major automakers like Tesla and Ford

3. Pharmaceuticals

In the pharmaceutical sector, India supplies 40 percent of the total generic drugs required by the US. India exported drugs and pharmaceuticals worth $8.7 billion to the US during 2023-24. If additional duties are imposed, it will affect companies like Gland Pharma, Aurobindo, Zydus Life, Lupin, Cipla, Sun Pharma and Torrent Pharma. Currently, the US does not impose any tariff on pharma imports from India, while India has imposed a 10 percent tariff on US pharma imports.

4. Electronics and Electrical Machinery

The tariffs will hit India's electronics sector, especially smartphone exports. The tariff hike is expected to range from 1.2 percent to 10.8 percent. Apple iPhones, which are assembled in India, account for more than 50 percent of India's electronics exports to the US. The tariff hike will increase their prices.
India manufactured $115 billion worth of electronics products last fiscal year. Of this, $52 billion is mobile phones.

5. Tech and IT Sector
Trump's tariff announcement is crucial for the country's leading IT companies with a presence in the US. Major IT firms including Infosys, Tata Consultancy Services (TCS) and Persistent Systems operate in the US. Their shares have fallen by up to 5 percent. If the tariffs are lower than expected, their share value may recover.

6. Textiles
28 percent of India's textile exports go to the US. In the fiscal year 2024, garments worth $9.6 billion were exported from India. If Trump imposes tariffs, it is likely to affect this sector.