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Mint
9 minutes ago
- Mint
Trump's tariffs on India: What it means for the Indian stock market? Is it a long-term negative or short-term pain?
Trump India tariffs: Contrary to widespread expectations and dashing New Delhi's hopes of a relatively better trade deal, US President Donald Trump, on July 30, announced a 25 per cent tariff on "fiend" India, to be effective from August 1. The 25 per cent tariff excludes a penalty due to India's energy and defence ties with Russia. Trump accused India of imposing higher tariffs on US imports and also having the "most strenuous" trade barriers. 'While India is our friend, we have, over the years, done relatively little business with them because their tariffs are far too high, among the highest in the world, and they have the most strenuous and obnoxious non-monetary trade barriers of any country,' Trump said on his social media platform Truth Social. India was not the only country in Trump's firing line. He also announced a 50 per cent tariff on most Brazilian goods but excluded a few sectors — including aircraft, energy, and orange juice — from the tariff. Later in the day, he announced a trade deal with South Korea with a 15 per cent tariff rate. After announcing tariffs against India, Trump said that the US will continue trade negotiations with New Delhi. Trump's tariff is a significant negative for several sectors of the Indian economy, including textile, auto components, leather goods, gems and jewellery, and certain food exports. Consequently, the tariffs are likely to have a cascading effect on other sectors and may weigh on overall stock market sentiment. Experts have begun trimming their growth forecasts for India, as the tariffs may affect exports and could also impact private capital expenditure. "When the US had initially imposed tariffs, we had lowered our forecast of India's GDP expansion to 6.2 per cent for FY26, presuming a tepid rise in exports and a delay in private capex," said Aditi Nayar, Chief Economist, ICRA. "The tariff (and penalty) now proposed by the US is higher than what we had anticipated, and is therefore likely to pose a headwind to India's GDP growth. The extent of the downside will depend on the size of the penalties imposed," Nayar said. The Indian stock market may stay in a range after the tariff announcements, with focus on next round of talks. Nifty futures were down about 200 points around 5 AM on Thursday. The domestic market has been rangebound for over two months due to a delayed India-US trade deal. Trump's 25 per cent tariffs are a negative development that may keep the mood sombre. "In the short term, the market will try to shed off its complacency. We do not expect a huge knee-jerk reaction but a rangebound market focused on ongoing earnings," said Utsav Verma, Head of Research - Institutional Equities, Choice Broking. He said key export-oriented sectors like textiles, pharmaceuticals, and automotive components are likely to be most impacted and may see reduced investor interest in the short term. Some experts point out that new tariffs are not significantly above what the market had expected. However, the "penalty" part remains undefined at this stage. "The announcement of a 25 per cent tariff on Indian goods, while higher than anticipated, broadly falls within the 15–20 per cent range that markets had been bracing for. In that sense, it is not entirely unexpected," Feroze Azeez, Joint CEO, Anand Rathi Wealth Limited, observed. "This could weigh on near-term export competitiveness and trigger currency volatility if sentiment deteriorates. That said, the overall trade and investment relationship between India and the US still has room for improvement and is not yet in a worrisome zone," said Azeez. Azeez highlighted that the Indian market is currently being driven largely by domestic investors, and FIIs are almost 85 per cent short. Therefore, a major sell-off is not expected. "Some volatility is likely; any dips will be buying opportunities for investors with even two to three years' time frames, as we have already had a 10-month time correction," said Azeez. Trump's tariffs on India will be effective from August 1, and at this point, it appears unlikely that Trump will extend this deadline. However, negotiations between the two countries will continue, and expectations that tariffs will come down to the 15 per cent range remain. "Recent progress in trade negotiations suggests a constructive path forward, and we believe that the trade deal will eventually follow, provided both nations show the necessary political will. Many investors expect the tariff rate to eventually settle around 15 per cent, paving the way for renewed confidence and stronger trade ties," said Verma. Read all market-related news here Read more stories by Nishant Kumar Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
Time of India
2 hours ago
- Time of India
India-US trade: Officials react cautiously to Russia penalty threat
NEW DELHI: As President Trump threatened to impose a penalty on India for its trade ties with Russia, Indian officials reacted cautiously as they reiterated India's position that securing energy needs of the Indian people is the overriding priority. A source, speaking on condition of anonymity, said India is buying oil not because it wants to help Moscow but because it's the right thing to do based on the prevailing market conditions and the global geopolitical situation. Trump said India has always bought "a vast majority of their military equipment from Russia, and are Russia's largest buyer of energy along with China". However, India had been keen on announcing new plans for defence procurement and co-production arrangements with the US too. During PM Narendra Modi's visit to the US in Feb, Trump pushed India to lower tariffs and buy more defence products from the US that would facilitate a fair trade deal. With the US encouraging India to reduce its dependence on Russian-origin equipment, the leaders had agreed to expand defence sales and co-production to strengthen interoperability and defence industrial cooperation. In that context, govt sources here said some of Trump's claims don't stand up to scrutiny. "The fact is that India-US defence trade has been increasing since 2008, while the dependence on Russia continues to reduce considerably," said an official on condition of anonymity, adding that the US is now among the top arms suppliers to India along with Russia and France. While much has been made of India's imports from Russia, little attention has been paid to the fact that its crude imports from the US have seen a significant jump too with the US emerging as the 4th largest supplier to India in April this year, according to Indian officials. Stay informed with the latest business news, updates on bank holidays and public holidays . Discover stories of India's leading eco-innovators at Ecopreneur Honours 2025
Hindustan Times
3 hours ago
- Hindustan Times
Kharge calls INDIA bloc meeting to discuss voter roll revision in House
New Delhi: Opposition's INDIA group will sharpen its focus on the Election Commission's Special Intensive Review (SIR) of electoral rolls, will insist on a debate and might also make a comprehensive protest plan over the issue after Parliament finished discussing Operation Sindoor in both Houses. Rajya Sabha LoP Mallikarjun Kharge speaks during the discussion on Operation Sindoor in the Rajya Sabha. (ANI PHOTO) INDIA group has called a meeting of its floor leaders of 24 parties on Thursday to evolve a common strategy on the issue. Congress president and Rajya Sabha's Leader of the Opposition Mallikarjun Kharge will chair the meeting. In the Rajya Sabha, both Leader of the Opposition Mallikarjun Kharge and Trinamool Congress floor leader Derek O'Brien demanded a debate on SIR. O'Brien reminded deputy chairman Harivansh that there are two more weeks left in the ongoing monsoon session and a debate on SIR can be organized. Kharge sought Chair's assurance when the debate on SIR will start and reminded Harivansh that since the beginning of the session, the Opposition's efforts had been to debate SIR. Later, talking to HT, Kharge said, 'Our top issue now is SIR. We want a debate on SIR and will make a plan on how the issue can be highlighted.' Kharge also didn't rule out protests but indicated that any rally or Opposition march might not happen in the short term. Demanding a debate on SIR, Kharge also told HT, 'The EC has announced it would do SIR in other states too. Notification has been issued in some states. This is a clear plan to not allow a large section of voters to vote.' INDIA group– which has 24 parties in Parliament, had met on July 19 to strategize for the monsoon session of Parliament. During the meeting, Pahalgam terror attack, Operation Sindoor and SIR were picked up by leaders as top issues. 'Now that the Operation Sindoor/ Pahalgam debate is over in Parliament, our focus will sharpen on SIR,' said an Opposition leader. O'Brien said, 'SIR is a huge issue for the Opposition.' Bihar deputy CM Vijay Kumar Sinha, who came to Parliament for work, reacted to the Opposition's protests over SIR. 'The SIR will ensure only genuine voters will cast their votes. Otherwise, they (Opposition) wants votes to be cast in the name of those who have died. The people of Bihar are happy. Only those who come from RJD and Congress cultures are facing problems. They are in panic and they have accepted defeat. So, they are looking for an excuse.'
