India has influence on us in the Trump tariff plan

This report is a “Inside India” newsletter in CNBC for this week, which brings you a timely and timely news to emerging power and major companies behind the height of a meteor. Like what you see? You can subscribe here.

While the United States will impose a tariff on goods imports, which represent 56.1 % of the total exports of IndiaThe services have not been targeted yet. Some of the largest companies in India, such as TCS and InfosysIt is unlikely to be directly affected by definitions, and it may only be exposed to the issue indirectly if a global economic slowdown occurs because most of their customers depend on abroad.

The export destinations in India for goods are greatly varied, as the United States represents only 18 % of shipments in 2023-2024, according to the Indian Ministry of Trade and Industry.

“The trade structure from India to the United States is completely different from, let’s say that China, for example, is due to the service component,” James Sullivan, head of stock research in Asia Pacific at JPMorgan, told CNBC’s Squawk Box Asia. “The American administration is almost focused on trade in goods, not trade in services, as the United States has a surplus.”

“If this narration begins to transform, we must realize that the vast majority of Indian exports to the United States are information technology services,” Sullivan added. “These shares have made a major blow due to the risk of recession in the United States, and the lack of expenses of companies that would reach the IT service line.”

While India has some strengths, the task facing Indian negotiators is likely to be more challenging by competitors who stare in a much worse scenario.

China is now facing a total tariff of 125 % (at the time of this pressure on the keys), while Vietnam risks the imposition with 46 % of “mutual” import duties 46 % – of the highest rates imposed by the United States.

Their economic weakness, as exports to the United States are a large part of the gross domestic product, have led to apostate responses. While China decided to respond to counter -measures, Vietnam offered to survey all definitions, and may pave the way for the free trade agreement with the United States

“I just received a very fruitful invitation with Lam, the Secretary -General of the Communist Party in Vietnam, who told me that Vietnam wanted to reduce the customs tariff to scratch if they managed to agree with the United States,” Trump posted on social media the social reality and the truth and x Soon after the tariff program was unveiled.

On Wednesday, Treasury Secretary Scott Bessen, who leads commercial negotiations, revealed that he was meeting with Vietnam Commercial negotiators on that day.

Vietnam proactive to reduce customs tariffs on agriculture and energy imports from the United States as soon as the customs tariff was unveiled, and went further through the promising to buy space, defense and security from the United States

The important point is that Vietnam throws the kitchen sink on the issue of definitions and yearns for free trade. However, this step can also stimulate other countries to compete by providing more commercial conditions for the United States.

The short term, while apple According to what was reported to charge more iPhone devices in India to the United States to compensate for the sharp tariffs on China, Cubino’s executive officials may also wonder whether zero ranks in Vietnam-if there is a better betting deal than India.

It would be normal for companies to think that while the 26 % definitions on India are better than 125 % definitions on China, 0 % winding tariffs will be better. And that this school of thought will not be limited to California as well.

Japanese electronics maker Sourcenext Corp This week she announced plans to establish a new factory in Vietnam after its current facility in China has become non -practical for exports to the United States

At first glance, it may seem that all of this exposes India’s position with the United States to danger

“Although India wants to have a special solution to the US-Vietnam Deal manufacturing will definitely have some influence on (its negotiations) with the United States,” Mark Martgessi, director of Ubre Capital, told CNBC’s inside India. “And remember that the fatwa is always more tolerant of those who surrender early to its magic. Those who hang up for a longer period have made him lick the pieces.”

Vibrant Global Emerging Markets Fund It has 32 % customization for China and 30 % customization for India.

Nevertheless, from a race to bottom to low definitions, Martirosian believes that India has run out during negotiation with the United States, indicating the fact that exports in goods are a small percentage of the general economy of India. In the sense that Indian trade negotiators who deal with the United States are unlikely to have a mandate to make widespread concessions similar to Vietnam.

Others agree.

“The situation related to the definitions is still developing, but India is in a relatively good position due to the low adoption of export of goods, and therefore may have some flexibility in determining its location in the end,” said Abiram Elyswarabu, head of India’s shares at BNP Paribas. “Most sectors in India derive less than 10 % of their revenues from exports to the United States except for information technology and pharmaceutical services.”

“India will not give up some areas such as cultivation, and therefore it is in a better position of bargaining,” said Gorsf Narin, the main adviser to the London Capital Growth Fund in London.

“My feeling is that India will try to compensate for a negative commercial balance … by adhering to increasing imports in areas such as oil / defense, etc., however, definitions can reduce 0 % in many areas such as medicines and cars, as India has already has a very sophisticated and low -cost manufacturing base, and imports will be only distinct products.”

Narin added that even in the short term, India will witness a “limited effect” of definitions, as supply chains cannot be changed easily, as with the most prominent Apple.

Narin added: “I think companies will take a long -term structural approach to rid their supply chains. India has the advantage of not being considered to be guided by China, which works for them,” Narin added.

For investors in Indian stocks, the market was less tolerant. Regardless of the tariffs of tariffs, stocks in India are still expensive due to their fiery assessments.

“The profit estimates still need to be resettled,” said Aditya Sorich, India’s Stock Research Director at Macquari Capital. “We believe the worst behind us and we can see flows in the coming months.”

Sorich also suggested that investors can hide from the current turmoil by investing in stocks that derive a lot of their revenues locally, instead of the senior exporters. Macquarie analyst said he prefers the telecommunications company AartelOil and Gas Company generationAnd Ultlatech cement Until the dust settles.

Reserve Bank in India reduces prices. On Wednesday, the central bank in India Reducing the policy price by 25 basis points to 6 %On the occasion of its lowest level since September 2022, growth in the fifth largest economy in the world. The price reduction was in line with the expectations from the analysts included in Reuters. RBI also reduced its growth forecast for the fiscal year 2025-26 to 6.5 % of 6.7 %.

“Optimistic” expectations by RBI. Mr. Saggjar, Professor of Economics at the Indian Business Administration IIM Kozhikode, and former CEO of RBI, said, ” Growth can be about 6 % this year He called RBI to drop “optimistic”.

the The Indian government expects to meet the goal of growth. Despite Trump’s disturbances‘s Definitions, it is likely to hit India GDP expansion of 6.3 % -6.8 % An official at the Indian Ministry of Finance, who spoke on the condition of anonymity, said that a number of the economic survey of the Indian government in January-the fiscal year 2025-26.

The customs tariff may be reduced on European Union cars. According to the Reuters report, adapted from sources, the government of India Prime Minister Narendra Modi is considering reducing it Definitions on European Union car imports to 10 % of 100 % In stages. However, home car manufacturers want customs tariffs by 30 % minimum and to leave electric car duties unchanged by 110 %.

Indian stocks fell on Thursday, and the trend fell in Asian stocks. the Elegant 50 The index closed 0.6 % less, and a 2.2 % loss is directed this week. The index decreased by 5.3 % this year.

The return of Indian government bonds decreased for 10 years to 6.43 %, decreasing 3 basis points from last week.

On CNBC TV this week, Brangulus Bahandari, the chief economist in India in HSBC, estimated that the Trump tariff for India can Shave 0.5 percentage points From the country’s economic growth. If global trade patterns, such as China, which export more goods to India, this may also harm the local manufacturing sector in India. “Direct or indirect, our sense is that growth will need help” in the next few quarters.

Meanwhile, Sonal Pharma, the former chief economist in India and Asia, said that there was Workers Make the wallet and direct investments in India attractive. First, the difference in the degree of definitions between India and China is in favor of India, which will be “logical” for multinationals to transfer their production to India. Second, India is a strategic ally of the United States, and works with the largest economy in the world in long -term trade plans.