Tariff terror: Despite trade costs, India Inc. bonds resilient, says Barclays
Virendra Pandit
New Delhi: On the day that 50 percent US tariffs on imports from India became effective, leading consultancy firm Barclays Research said on Wednesday that while India Inc. will face margin compression, it will be supported by strong leverage, liquidity, and domestic demand as the American tariffs hit USD 55 billion worth of exports.
Despite the export shock, its impact on corporate debt is expected to remain in check, and Indian corporate credits may weather the latest tariff escalations, according to the media report.
The trade-weighted tariff rate on Indian exports will jump from 2.7 percent at the start of 2025 to 20.6 percent now and to 35.7 percent.
By contrast, India’s tariffs on US imports remain at 9.4 percent, leaving the bilateral imbalance at its widest in decades.
Barclays estimated that about USD 55 billion worth of Indian exports, nearly 70 percent of total shipments to the US, are now directly at risk. Electrical machinery, gems and jewellery, apparel, and machinery face the steepest hikes, while smartphones, petroleum products, and pharmaceuticals remain temporarily exempt.
“High-grade credits could see some knee-jerk spread widening, but strong corporate fundamentals and domestic funding access should limit lasting damage,” Barclays analysts said.
Company exposure is also uneven. Biocon Biologics, with 44 percent of its revenue coming from the US, faces moderate-to-high risk if pharmaceutical tariffs rise toward the 200 percent ceiling signalled by US President Donald Trump.
JSW Steel’s US plants are vulnerable to margin pressure, while Tata Steel has limited exposure. Vedanta Resources earns less than 2 percent of its revenue from America, leaving its earnings more tied to commodity prices. UPL Corp. may benefit if tariffs on Chinese agro-chemicals improve its relative pricing in North America.
