Indian equity benchmark indices Sensex and Nifty50 fell on Tuesday, a day after 50% tariff by the US on Indian goods came into effect, hurting investor confidence. Both the benchmark indices stayed weak in the morning session with analysts saying that the new tariffs have shaken market sentiment.
Stock analysts, however, say the market is unlikely to panic because it will view the high US tariffs as short-term aberration which is expected to be resolved soon.
Commerce Ministry officials said, losses are expected in the short-term in labour-intensive sectors, but disrupted supply chains will be recalibrated in a few months. Finance Ministry officials say, the ripple effects on the economy could be challenging and need careful attention.
Prime Minister Narendra Modi appears not in a mood for any knee-jerk reaction. Textiles, seafood, leather, gems and jewellery exporters will be provided outreach in nearly 40 countries including UK, EU, Japan, Australia, South Korea and Russia.
Already textile and garment exporters are considering shifting the final stage of their manufacturing operations to other countries to protect their US market following the imposition of steep tariff. India exports roughly $38 billion worth textiles and readymade garments. 35 pc of this is exported to the United States.
With the imposition of 50 pc US tariff, Indian textiles and garments will become costly in the US, and Vietnam, Bangladesh, Sri Lanka, Pakistan and China can make gains. Textile sector’s share in India’s GDP is 2.3 per cent and in total industrial output its share is 13 pc.
One-third of Indian garments and textiles are exported to the US and the steep tariff has come as a shock. India is in talks with Russia, South Korea, Japan and Australia for diversifying exports.
The second sector which will be badly impacted is the gems and jewellery industry. India exports $10 billion worth gems and jewellery out of which the 40 pc is exported to the US alone. For American importers, buying Indian gems and jewellery could become a loss-making proposition.
India is a big exporter of polished diamonds, and 30 pc of its diamond exports is exported to the US. India accounts for 90 pc of the cutting and polishing of natural diamonds across the world. Exporters in Surat say that the initial shock of the steep tariff will be met soon by diverting exports to other countries.
Trump’s 50 pc tariff is a challenge for India, but heavens will not fall. It will be incorrect to say that Trump’s tariff will damage Indian economy.
On one hand, Indian exporters will face a steep fall in exports, but on the other hand, Trump will have to face the ire of consumers in the US.
I spoke to several trade experts today. Most of them said, there is no need to be worried over Trump’s tariff. The global situation is such that this tariff cannot be sustained for long. Ultimately, Trump will have to lower the tariff, because it is not based on merits. Its only objective is to harass Indian exporters.
Trump is also facing accusations of applying double standards. Questions are being asked how China was let off when it is buying oil from Russia and only India was singled out for 25 pc penal tariff? Did Trump invent the excuse of purchasing Russian oil?
The main issue is: Prime Minister Modi has refused to open India’s doors to American agriculture and dairy products. This got Trump’s goat.
Whenever talks will take place between Indian and US officials, the question that will be raised before Trump is: why countries buying Russian oil were treated differently? Why different standards were applied on India and China?
Trump will be asked what was the justification of leaving out China when he imposed additional tariff on India for buying Russian oil?
American trade experts feel that 50 pc tariff cannot be a long-term game. There are internal pressures visible in the Trump administration. US Treasury Secretary Scott Bessent said on Tuesday that India and the US have good relations, both President Trump and PM Modi have good personal rapport. He has expressed the hope that “at the end of the day”, both countries will resolve their tariff issue soon.

Vote theft : Rahul’s logic does not carry weight

Donald Trump has got a new supporter in India – Rahul Gandhi. Anybody who embarrasses Narendra Modi comes into Rahul’s good books.
At his Muzaffarpur rally in Bihar, Rahul Gandhi broke limits of political decency. He used low-level language about PM Modi. Rahul has been levelling accusations of “vote theft” almost daily, but on Tuesday, he said, Trump gave 12 hours to Modi to enforce ceasefire, but the Indian PM did this within five hours.
Rahul Gandhi also spoke about what he called the “Gujarat model”. He alleged that both PM Modi and Home Minister Amit Shah have been winning elections in Gujarat for the last twenty years with help from the Election Commission.
BJP spokesperson Gaurav Bhatia reacted saying, the words used by Rahul Gandhi for PM Modi reflect the real DNA of Congress. Rahul, he said, is still immature.
It is a fact that the Congress lost three consecutive Lok Sabha elections under the leadership of Rahul Gandhi in the last 11 years. But one thing to note, during these 11 years, BJP lost assembly elections in Rajasthan, Madhya Pradesh and Chhattisgarh. Congress has its governments in Telangana, Karnataka and Himachal Pradesh. How can one allege that Modi won all elections through “vote chori” during the last 20 years?
I think Rahul Gandhi is still searching for the correct answer since the last 11 years to the question why Congress loses elections.
Rahul Gandhi never acknowledged that Modi won because of his popularity with the masses. Earlier, Rahul Gandhi used to allege, BJP wins elections with the help of Enforcement Directorate, CBI and Income Tax. But the same agencies were with the Congress-led UPA government for 10 years from 2004 to 2014. And yet, Congress lost Lok Sabha elections badly in 2014.
When this logic didn’t work, Rahul used the “vote chori” accusation for his party’s electoral losses. When Rahul says, Modi wins either by adding more names in voters’ list or by removing names from the list, his argument can only work for his supporters. For the rest of the people of India, this argument is neither logical, nor convincing.
Whenever Election Commission conducts elections, lakhs of teachers, govt servants and political workers are involved in the electoral process. Anybody using illegal means to make somebody win or lose can be caught immediately. So, questioning the entire electoral process by making Election Commission the scapegoat, will not carry any weight.
Get connected on Twitter, Instagram & Facebook