India-US Trade Relations: Overview & Impact
Let’s get you the update as far as India-US trade relations are concerned. Let’s put the spotlight back. Get you the update as far as the stock impact is concerned. The revenue, in fact, the exposure is a concern.
Uh, Sam, help us out with uh the exact fine print when it comes to India-US relations. L US is one of the largest trading partners when it comes to India, and India exported goods worth nearly 86.5 billion US in FY25 to the US. Now that was nearly 2.2% of India’s GDP. But do remember that the 50% tariff, which is getting uh applicable from today is is applicable or is valid on only 7 67% of India’s total exports to the US market. This translates to around 58 billion US dollars of exports, which is nearly 1.5% of India’s GDP. The remaining are the sectors that are under section 232. So no tariffs will be applicable on these sectors.
Now, theoretically, a 50% tariff could lower the GDP growth of India by around 70 to 80 basis points, as per analysts and which are the sectors that we need to focus on.
Sectors with High Exposure & Impact
Auto & Auto Ancillary Sector:
Firstly, if you look at the auto and the auto ancillary sector here, the ancillaries could get impacted the most. Sona BLW Ram Krishna forging and Bhat forge have an exposure of close to 25 to 40% of the total sales coming in from the US market. Tata Motors gets around 23% of its revenue. For Samarana, Madras, Bal Krishna tires, Sansera Engineering, and Apollo tires. This number varies anywhere between 3% to 18%. That is the total revenue that they get from the US market in FI24.
Chemical Stocks:
Chemical stocks UPL could get impacted the most, around 20 to 25% of the revenue comes from the US market, followed by SRF, which gets nearly 20% of its revenue from the US market. Jubilant Engravia gets around 9% but apart from that, multiple other chemical companies export to us, to name a few: Art Industries, Pi Industries, Atul Navin Floren. Apart from that, alkalamines and Gujarat Fluorochemical also have exposure when it comes to the US market
Textile Sector:
The textile sector is now also impacted the most. Nearly US accounts for nearly 28% of India’s textile exports, and more than half of these textile exports were from India in the US is for the US cotton now, if you look at the stocks that get impacted the most. Trident has around 38% revenue exposure to the US market. Followed by Wellspan Living, which has a 63% exposure. KPR Mill has a 19% exposure. Apart from that, there are Alok Industries, Himat Singha and Urban, which have an exposure of anywhere between 37% to 83 odd cent.
Seafood Exporters:
Seafood exporters, that is, the shrimp exporters or the shrimp feed exporters, Avanti Feeds Epic’s frozen food, Water-based, have an exposure of anywhere between 40 14% to 63% of the total revenue coming in from the US market
Consumer Companies:
When it comes to consumer companies, not much of players get impacted few of them LT Foods, get around 39% of their revenue kale 10% while Tata Consumer gets around 12% of its revenue coming in from the US market
Energy Sector:
Now, if it comes to energy no direct impact on utilities and renewable energy developers, but a negative impact that we could see when it comes to solar PV cell companies. Now, War Energies has an order book exposure of 57% while Premier Energy’s order book exposure is less but they have expansion or they had expansion plans in the US. So, that could get impacted going forward.
Oil & Gas:
Now, when it comes to oil and gas again, India used to source around 20 to 35 to 40% of its crude requirements from Russia. This has come down because of the fact that the Russian crude discount has come down to around 1.5 to $2 per barrel.
But again if India chooses not to buy Russian crude then the the cost for buying a crude from the normal market would at least go up by around $2 per barrel for Indian companies and OMC’s and Reliance industries could get impacted because of this and generally if you look at every $1 per barrel rise in the gross in the crude prices could impact the marketing margins by around 0.5 rupees per liter and that means for Reliance industries their AITA could get impacted by around 3 odd% and for oil marketing companies the impact could be as much as 10 odd percent depending on whether be source crude from Russia or not.
Sectors with Least Impact
But then then but then, there are a host of sectors that get least impacted because of these Trump tariffs. First, it’s the IT sector, FMCG, telecom, real estate or one of these. If you look at telecom, real estate, and FMCG, they have most of the revenue coming in from the domestic market. Again, banks, insurance, power, steel and capital goods.