Indian Corporate Credits Likely To Stay Resilient Amid US Trade Shock: Barclays

Indian corporate credits are expected to withstand the latest tariff escalation from Washington, Barclays Research said in a note on Wednesday. The warning comes as US import duties on Indian goods climb to unprecedented levels.

The trade-weighted tariff rate on Indian exports will surge to 35.7 per cent from 20.6 per cent now, and from 2.7 per cent at the start of 2025. The rise follows the combined 50 per cent levies set to take effect on 27 August, Barclays said.

In contrast, India’s tariffs on US imports remain at 9.4 per cent, pushing the bilateral imbalance to its widest in decades.

Barclays estimates that about $55 billion of Indian exports, nearly 70 per cent of shipments to the US, are directly at risk. Electrical machinery, gems and jewellery, apparel and machinery face the steepest hikes. Smartphones, petroleum products and pharmaceuticals remain temporarily exempt.

Despite the export shock, Barclays said the effect on Indian corporate credits should remain contained.

Analysts noted that high-grade credits could face some knee-jerk spread widening.

However, strong corporate fundamentals and access to domestic funding are likely to limit lasting damage.

Company exposure remains uneven. Biocon Biologics, which earns 44 per cent of its revenue from the US, faces moderate-to-high risk if pharmaceutical tariffs rise towards the 200 per cent ceiling signalled by US President Donald Trump.

JSW Steel’s American plants are vulnerable to margin pressure, while Tata Steel has limited exposure. Vedanta Resources derives less than 2 per cent of its revenue from the US, leaving its earnings more tied to commodity prices.

UPL Corp may even benefit if tariffs on Chinese agro-chemicals improve its relative pricing in North America.

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