Sector-wise Impact & Analysis of Increased Reciprocal Tariff on India by the USA

The US has imposed a 26% reciprocal tariff on Indian imports, triggering concerns across key export-driven sectors.

While pharmaceuticals and base metals have been spared, industries like automobiles, textiles, electronics, and capital goods are facing the heat.

Companies with significant US exposure may see margin pressures, though India’s lower tariffs compared to China and Vietnam could offer some long-term export competitiveness.

This article explores the sector-wise impact and what it means for India’s trade outlook.

1. Pharmaceuticals: Minimal Disruption, For Now

Outlook: “Watchful waiting” is the keyword here. While Indian pharma exports have escaped direct impact, there's a lingering risk of future tariff-specific action. Investors should stay alert.

Sector Overview

Metric	Details
US Exposure	High: US is one of the largest buyers
Tariff Status	No new tariffs imposed
Indian Tariff on US Pharma	10% on ~50% of US imports
Overall Impact	Neutral to mildly positive

Stock-Level Impact

Company	US Dependency	Tariff Exposure	Remarks
Lupin	Moderate	Exempt	UK acquisition adds diversification
Dr. Reddy’s	High	Exempt	No impact for now; watch future moves
Sun Pharma	High	Exempt	Largest exporter, well positioned

2. Automobiles & Auto Components: One of the Worst Hit

Outlook: Tariffs have severely dented the export outlook, particularly for auto parts makers heavily reliant on the US. Companies with a domestic focus are expected to fare better.

Sector Overview

Metric	Details
US Exposure	Very High in components (Class 8 trucks, etc.)
Tariff Status	26% reciprocal tariff
Previous Tariffs	25% on auto components (March 2025)
Overall Impact	Strongly negative for exporters

Stock-Level Impact

Company	US Revenue Share	Tariff Exposure	Remarks
Bharat Forge	40%	Covered	Major impact from Class 8 truck parts
Ramkrishna Forgings	30%	Covered	Similar vulnerability
Sona BLW	43%	Covered	High-end transmission parts hit
Balkrishna Industries	16.40%	Covered	Moderate exposure
Uno Minda, Lumax, Landmark Cars	Low	Not covered	Domestic focus makes them safer

3. Textiles: Immediate Pain, Possible Long-Term Gain

Outlook: While short-term pain is likely for US-facing textile companies, India may gain market share in the long run due to relatively lower tariffs compared to competitors like China and Vietnam.

Sector Overview

Metric	Details
US Exposure	Moderate to High
Tariff Status	Now under 26% reciprocal tariff
Previous US Tariffs	6%–33% on various categories
Overall Impact	Short-term negative, long-term cost edge

Stock-Level Impact

Company	US Exposure	Tariff Exposure	Remarks
Gokaldas Exports	High	Covered	Short-term hit expected
Welspun India	High	Covered	Key player in towels, bed linen exports
Indo Count	High	Covered	Vulnerable due to strong US linkage
Himatsingka Seide	Moderate	Covered	Price-sensitive segment may face pressure

4. Electronics Manufacturing Services (EMS): Mixed Bag

Outlook: Tariff burden may lead to reconfiguration of supply chains. Companies with a US manufacturing base may emerge stronger.

Sector Overview

Metric	Details
US Exposure	~$14.4B electronics exports in CY24
Tariff Status	26% tariff on exports
Global Comparison	China (26%), Vietnam (46%) tariffs
Overall Impact	Mixed — India gains relative edge

Stock-Level Impact

Company	US Exposure	Tariff Exposure	Remarks
Avalon	High	Covered	US facility helps partially mitigate risk
Cyient DLM	High	Covered	Positioned to benefit by shifting base
Dixon Tech	Low	Covered	Minimal exposure; largely domestic

5. Metals: Tariff-Free… But Not All Good News

Outlook: While base metals are safe, niche players like HEG will face a hit due to targeted tariffs.

Sector Overview

Metric	Details
US Exposure	Moderate
Tariff Status	Base metals exempt; Graphite taxed
Strategic Goods	Copper, tungsten, zinc —not tariffed
Overall Impact	Mixed — depends on the product line

Stock-Level Impact

Company	US Exposure	Tariff Exposure	Remarks
HEG	>15%	Covered	Graphite electrodes taxed — margins at risk
Jindal Steel	Low	Exempt	Domestic demand, policy support in India
JSW Steel	Low	Exempt	Exempt from new tariff; supported by govt orders

6. Capital Goods & Ancillaries: Exporters to US Brace for Impact

Outlook: Capital goods players with substantial US exposure are expected to see earnings pressure. Domestic business will be key to offset risks.

Sector Overview

Metric	Details
US Exposure	Moderate to High for selected players
Tariff Status	26% across all products
Overall Impact	Negative — earnings drag expected

Stock-Level Impact

Company	US Exposure	Tariff Exposure	Remarks
Aeroflex Industries	59%	Covered	One of the worst hit in this sector
Timken India	High	Covered	Bearings business faces major headwinds
NRB Bearings	Moderate	Covered	Sensitive to any demand disruption

7. Industrial Machinery (Elgi Equipments & AIA Engineering)

Outlook: Elgi is at greater risk given its dependence on US revenues. AIA remains largely insulated.

Sector Overview

Metric	Details
US Exposure	Low to Moderate
Tariff Status	26% imposed
Overall Impact	Company-specific

Stock-Level Impact

Company	US Exposure	Tariff Exposure	Remarks
Elgi Equipments	26.3%	Covered	Major risk to revenue stability
AIA Engineering	0.7% of profits	Covered	Negligible effect

8. IT Sector: Tariff Ripple Effect, Not Direct

Outlook: The IT sector may not be directly tariffed but could suffer from indirect budget contractions and project deferrals in the US.

Sector Overview

Metric	Details
US Exposure	Very High
Tariff Status	No direct tariffs imposed
Risk Driver	Inflationary pressure, reduced tech spending
Overall Impact	Indirectly negative

Stock-Level Impact

Company	US Exposure	Tariff Exposure	Remarks
Infosys	High	Exempt	Budget cuts may delay discretionary spends
TCS	High	Exempt	Long-term client contracts at some risk
HCL Tech	High	Exempt	Government and infra-focused exposure stable

9. Renewable Energy – Solar Modules (Waaree Energies)

Outlook: Significant impact expected.

Sector Overview

Metric	Details
US Exposure	High
Tariff Status	26% tariff imposed
Overall Impact	Significantly negative

Stock-Level Impact

Company	US Exposure	Tariff Exposure	Remarks
Waaree Energies	54%	Covered	US facility won’t fully offset export impact

The reciprocal tariffs imposed by the US are a mixed bag for India Inc. While sectors like pharma and base metals are shielded for now, autos, textiles, EMS, and selected capital goods are staring at immediate pain.

Yet, the situation is fluid — and how India adapts through domestic policy support, supply chain tweaks, and trade diplomacy will determine the lasting impact.