- The short (what, when, who’s hit)
- Sector risk map & possible carve-outs
- Rupee & curve: trader checklist
- Three scenarios into October MPC
- 30-day CFO playbook
- FAQ
The short
- When: Additional 25% duty kicks in Aug 27, 2025, taking total tariffs on Indian goods to up to 50% in the U.S. market.
- Why: U.S. action tied to India’s Russian oil purchases; notices issued, negotiations ongoing.
- Hit list: Gems & jewellery, textiles/apparel, leather/footwear, furniture, seafood (shrimp) face the sharpest shock; pharma & IT services relatively insulated.
- RBI stance: “Ready to act” with ample-liquidity bias; expect smoothing of FX/curve volatility if needed.
Sector risk map (first-order)
| Sector | U.S. exposure (qualitative) | Risk level | Immediate shifts |
|---|---|---|---|
| Gems & jewellery | High | Severe | Re-price contracts; explore bonded-warehouse routing; hedge USD receivables. |
| Textiles & apparel | High | Severe | Shift to FOB renegotiations; evaluate Mexico/EU near-shoring partners. |
| Leather/footwear | Medium–High | High | Front-load shipments; seek tariff-sharing clauses with buyers. |
| Seafood (shrimp) | High | High | Rework HS-code mapping; diversify to Japan/EU; insure inventory. |
| Furniture/wood | Medium | High | Switch to make-to-order; reduce WIP; evaluate U.S. 3PL duty-drawback. |
| Pharma (formulations) | High | Low–Medium | Watch for carve-outs; protect margins via COGS swaps. |
| IT/ITES | Very High | Low | Minimal direct impact; monitor client budget deferrals. |
Carve-outs to watch Targeted exemptions or delayed enforcement for select product lines/components are under review in the U.S.; keep SKU-level HS codes handy for any relief windows.
Rupee & curve: trader checklist
- FX: Expect INR volatility; importers to buy dips; use layered hedges (forwards + options) with board-approved limits.
- Rates: If RBI smooths liquidity, belly of the G-sec curve can stabilise; watch OMO/Twist hints and OIS-Gsec basis.
- Credit: Stress pockets in export-heavy SMEs; tighten underwriting on U.S.-dependent receivables.
RBI’s “won’t be found wanting” line implies flexible liquidity operations before any stance/rate decisions.
Three scenarios into October MPC
| Scenario | Growth/Inflation | Policy read | Positioning cue |
|---|---|---|---|
| Full 50% tariffs bite through Q3 | Growth softer; inflation contained | Dovish bias, liquidity support; optional insurance easing if data allow | Add duration on dips; overweight high-quality exporters with pricing power |
| Partial carve-outs/deferrals | Growth resilient; sentiment improves | Hold; maintain ample liquidity | Neutral duration; rotate to domestic cyclicals |
| Escalation + FX spillovers | Growth risk and imported inflation | Hold with tighter ops calibration | Short belly; raise FX cover ratios |
30-day CFO strategy
Contracts & pricing
- Trigger tariff-sharing/force-majeure/illegality clauses; shift to ex-tariff pricing.
- Re-date quotes (Aug 27 on); insert FX pass-through triggers.
Supply chain
- SKU-level HS code audit; test alternative routings (near-shore, FTAs).
- Reduce WIP; insure in-transit goods; plan customs storage.
Treasury
- Layer hedges (1–3–6m); set stop-losses; track RBI liquidity signals.
- Stress-test interest coverage for margin compression.
Stakeholders
- Investor note on tariff sensitivity; update lenders on covenants.
- Prep U.S. client FAQs on delivery & re-pricing.
FAQ
- Effective date? Additional duty from Aug 27, 2025 (taking total up to ~50% on many Indian goods).
- Are exemptions possible? Targeted carve-outs are being examined; track product-specific notices.
- Does RBI plan a rate move now? No pre-commitment. Expect liquidity smoothing first; stance depends on data.