‘India, U.S. in talks to mitigate influence of reciprocal tariffs’

India can mitigate the influence of upper U.S. tariffs by means of talks and by offering higher market entry to U.S. farm merchandise and rising vitality purchases, Moody’s mentioned on Tuesday.

“Most corporations in our rated portfolio are domestic-focused with restricted publicity to the U.S. market. To mitigate stress from reciprocal tariffs, the U.S. and India are reportedly now in talks for India to decrease import tariffs on choose U.S. merchandise, enhance market entry for U.S. farm merchandise and enhance U.S. vitality purchases, whereas looking for to provoke a commerce deal by the autumn of 2025,” the score company mentioned.

Within the Asia Pacific area (APAC), creating nations like India, Vietnam and Thailand have the widest price differentials relative to the U.S. and probably the most uncovered sectors from right here embody electronics, motor automobiles, meals and textiles.

So far as India is worried, it has a decrease general publicity relative to most others nations within the area, though sure sectors equivalent to meals and textiles in addition to pharmaceutical merchandise face dangers, the score company mentioned.

In keeping with Amnish Aggarwal, Director, Institutional Analysis, Prabhudas Lilladher (PL), India is unlikely to expertise any “significant damaging impact” from U.S. insurance policies, as tender crude oil costs, geopolitical stability, and elevated know-how switch to India would neutralise the prices of Trump’s tariffs. 

“The reciprocal tariffs introduced by the Trump 2.0 administration, incorporating non-tariff obstacles (NTBs), VAT constructions, and trade price deviations, make the method extra complicated and its financial price more durable to quantify as of now,” he mentioned whereas talking at a webinar on ‘India Technique’ on Tuesday. 

“With India’s weighted common MFN tariff at 12%, the best amongst G-20 nations, it’s a prime candidate for scrutiny. Even when U.S. tariffs on India rise to 15-20% by April 2025, India’s key export sectors particularly prescription drugs, electronics, jewellery, and textiles, function inside low tariff differentials, which reduces publicity to tariff escalation,” he mentioned. 

Stating that India’s exports are mitigated by a extremely diversified export base by new commerce routes by means of Europe and the Center East (IMEC), he mentioned, whereas tariff negotiations will stay a short-term market overhang, the structural basis of India-U.S. commerce stays intact. 

“Know-how, defence, and nuclear vitality have excessive development potential. India’s means to navigate tariff negotiations, leverage its geopolitical positioning, and realign provide chains ensures that this section is a momentary recalibration, not a retreat,” he emphasised.