A CRISIL research note has indicated that US tariffs will negatively impact profitability for Indian companies. This was shared widely on social media channels. As per its information, US tariffs will especially affect micro, small, and medium enterprises in India.
Micro, small, and medium-sized enterprises (MSMEs) are crucial to the Indian economy. They make a significant contribution to employment, exports, and overall economic growth. They account for over 30% of India’s GDP. They contribute over 40% of India’s exports and providing employment to millions.
CRISIL’s analysis indicates a negative outlook for the gems and jewellery sector, and a slightly negative outlook for chemicals, aluminium, and auto components.
The note indicates a neutral outlook for pharmaceuticals, solar PV modules, and steel producers.
However, it is slightly more positive for manufacturers of agricultural products, textiles, apparel, and smartphones.
These sectors collectively account for over 60% of India’s non-petroleum merchandise exports to the US.
Here is a breakdown of the sectoral impact of US tariffs on Indian industries:
Industry | India’s Exports as a % of Domestic Output | Exports to the US | Old tariff structure | Additional duties | New Tariffs | Potential Impact |
Textiles and apparel | 28.00% | 37.00% | 11.00% | 26 | 37.00% | Marginally favourable |
Steel | 5.00% | 1.00% | 0.00% | 25 | 25.00% | Neutral |
Smartphones | 30.00% | 37.00% | 0.00% | 26 | 26.00% | Marginally favourable |
Photovoltaics | 26.00% | 97.00% | 0.00% | 0.00% | Neutral | |
Pharmaceuticals | 32.00% | 53.00% | 1.30% | Exempt | 1.30% | Neutral |
Gems and jewellery | 26.00% | 37.00% | 7.00% | 26 | 33.00% | Unfavourable |
Chemicals | 40.00% | 13.00% | 3.70% | 26 | 29.70% | Marginally unfavourable |
Auto components | 15.00% | 28.00% | 2.00% | 25 | 25.00% | Marginally unfavourable |
Aluminium | 47.00% | 6.00% | 2.60% | 25 | 25.00% | Marginally unfavourable |
Agriculture | NA | 11.00% | 0.00% | 26 | 26.00% | Marginally favourable |
US tariffs are expected to negatively impact Indian companies, particularly MSMEs. While gems and jewellery face the most significant challenges, sectors like chemicals, aluminium, and auto components also see a negative outlook. However, textiles, apparel, and smartphones might benefit slightly.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Published on: Apr 9, 2025, 12:36 PM IST
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