Rating agency Fitch has said in a note that India Inc has ‘generally’ low direct exposure to US tariffs, however, sectors that are currently unaffected, such as Pharma, could be hit by further US tariff announcements, while adding that second-order effects too are on the rise.
The note, however, added that a trade deal between US and India could reduce these risks, even as India stares at an additional 25 percent levy over its oil imports from Russia, effective from August 27.
For Indian pharma companies, US is a key export market, and tariff risk on these items is not yet fully factored in, said Fitch, and could pose downside risks to these businesses. The note cited Biocon’s example, which derives around 40 percent of its sales from US through products mostly manufactured in India and Malaysia. “The competitive industry landscape could limit Biocon’s ability to pass on higher costs, despite the non-discretionary demand for its products,” Fitch said.
For crop production chemical producer UPL, US buyers make up for 10-12 percent of total revenue, and any tariff on its products could potentially affect its competitiveness in the American market. However, UPL still has ‘significant’ geographical and product diversification, Fitch added, which could mean the company will still be able to meet EBITDA growth guidance of 10-14 percent in constant currency terms, though the risk remains. “…we see limited risk to our EBITDA growth estimate of 11 percent (in US dollar terms) and leverage forecast for the financial year ending March 2026,” Fitch added.
While India’s direct exports of automotives to the US are limited, America still accounts for close to 20 percent of sales for auto supplier Samvardhana Motherson (SAMIL). These are supplied mostly from US production bases or from Mexico, which has secured a tariff exemption under an agreement. Still, Fitch had revised its Outlook on SAMIL to Stable from Positive in May 2025. Fitch said it expects a weak global auto sector outlook owing to tariff-related uncertainty.Fitch has assumed a very minimal direct tariff impact on Indian IT services, along with those companies that are domestically focused. Oil and gas, cement, engineering and construction, telecom and utilities are at lower risk of a direct impact. Though if US tariffs stay significantly higher than Asian peers, Fitch said it sees a moderate downside risk to India’s growth forecast for FY26, which would weigh on the operating performance of India Inc. “India’s corporates could also be affected if US tariffs divert supply to other markets, including India, as this could present downside risks to our domestic price assumptions for some products, such as steel and chemicals,” the note added.