Key Points:
- Trump’s tariffs on Indian goods expected to minimally affect India’s GDP
- India continuing Russian oil imports
- Strategic pivot from India towards Asia, Europe, Middle East underway
- Bajaj Finance (NSE:BAJFINANCE) viewed favourably amid consumption growth
US President Trump’s decision to impose an additional 25% tariff on Indian goods is set to create only limited direct economic disruption for India, according to Mugunthan Siva from India Avenue Investment Management.
Siva sees the bulk of Indian exports—about $400 billion—having roughly 20% exposure to the US, or $85-$87 billion. The direct impact on India’s GDP is estimated at just 2%, with GDP forecasts only declining by 20 to 50 basis points.
Siva states that India’s response remains focused on national interests, with the government adamant about continuing imports of Russian oil, despite being singled out relative to countries like China and Turkey.
Siva highlights a greater strategic pivot from India towards Asia, Europe, and the Middle East, suggesting that forced US actions could prompt a more unified Asian economic bloc.
Companies like Apple (NASDAQ:AAPL), which have shifted significant iPhone production from China to India, provide employment and sub-economies, but Siva flags a possible retreat by US firms operating in India if tensions intensify. Pharmaceuticals — a major Indian export sector — could also see US consumer prices rise if tariffs escalate.
For investors, Siva points to opportunities in local consumption stories, especially non-bank financial companies. Bajaj Finance (NSE:BAJFINANCE) stands out among firms expected to benefit from the pivot towards domestic consumption and continued credit growth.
