Indian Pharma Surges: 3 Powerful Reasons It Will Outshine Global Rivals Amid Trump’s Tariff Shock

India is emerging as a relatively strong player amid global market volatility triggered by Donald Trump’s new reciprocal tariffs. While countries like China, Vietnam, and Japan are facing steep tariff rates, India is handling the situation better due to ongoing trade negotiations with the U.S. and lower exposure to harsh tariff brackets. Key sectors like pharmaceuticals, semiconductors, and energy-related goods have been exempted from these measures, positioning Indian pharma and manufacturing industries to outperform global peers.

Domestically focused sectors such as agriculture, FMCG, finance, and infrastructure are also likely to remain stable. However, export-heavy industries like IT, textiles, and auto components may face near-term challenges, especially with declining U.S. demand. The IT sector is particularly vulnerable, as it relies heavily on American clients, and tech spending in the U.S. is slowing. Meanwhile, expectations for India’s Q4 earnings are modest, with projected growth of 8–10%—below the long-term average. Still, India is expected to fare better than most global economies as the tariff war unfolds.

Indian Pharma Surges: 3 Powerful Reasons It Will Outshine Global Rivals Amid Trump’s Tariff Shock

Vinod Nair, Head of Research at Geojit Financial Services, has offered his perspective on the ongoing global market turbulence sparked by new U.S. tariffs introduced by former President Donald Trump. While much of the world is feeling the pressure, Nair believes India is better placed than many of its global peers, especially in a few key sectors.

On April 2, 2025, Trump announced a new set of reciprocal tariffs, calling it a landmark economic step for the U.S. However, global analysts have expressed concern, viewing the move as a major blow to decades of progress in reducing trade barriers and strengthening global cooperation.

Unlike traditional tariffs based solely on trade imbalances, Trump’s approach considers other factors such as currency manipulation and market access issues faced by U.S. companies abroad. This has resulted in sharply higher tariffs—ranging between 26% and 46%—on imports from several Asian countries, including China, Vietnam, Indonesia, and Taiwan. If the situation worsens, China alone could face an overall tariff burden of up to 65%, according to The Economist.

India’s Strategic Edge in a Turbulent Time

India, by contrast, has not been hit as hard. This is largely due to ongoing trade discussions with the U.S., which may help cushion the impact. In addition, a few key Indian sectors—namely pharmaceuticals, semiconductors, and energy-related products—have been excluded from the tariff hikes. This offers a competitive edge to Indian firms in these industries, especially as global rivals face higher costs and barriers.

These exemptions provide Indian pharma and energy firms a chance to grow their global presence, benefiting from reduced competition. As a result, India could emerge as a relative bright spot amid the current global trade chaos.

Domestic-facing industries—such as agriculture, FMCG (fast-moving consumer goods), banking and finance, infrastructure, and cement—are also expected to remain largely unaffected. Since these sectors depend mainly on local demand, they are insulated from the fallout of global trade disputes.

Challenges Ahead for Export-Driven Sectors

However, the picture isn’t completely rosy. Some Indian sectors with high exposure to U.S. markets are likely to feel the pinch. These include IT services, auto components, textiles, seafood exports, and premium agricultural goods like Basmati rice. The Indian IT sector, in particular, could face serious headwinds. Many leading IT firms in India derive 50% to 80% of their revenues from the U.S., making them highly vulnerable to any decline in American tech spending.

The situation is further complicated by the high interest rate environment in the U.S., where rates stand at 4.5%, compared to 2.5% in Europe. These elevated borrowing costs are dampening both investment and consumer spending in the U.S., reducing the appetite for imports and hurting Indian exporters.

Global Risks Add to Uncertainty

There’s also growing concern that other major economies—such as the EU, Canada, Japan, and China—may respond with their own retaliatory tariffs. Should this trade war intensify, the global economy could take a hit. Forecasts now suggest that the probability of a U.S. recession has doubled from 20% to 40%. The 10% baseline tariff currently imposed on all U.S. trade partners is expected to weigh further on global trade volumes and economic momentum.

India’s Q4 Earnings Outlook

Back home, India’s fourth-quarter earnings season is about to begin. While some improvement is expected quarter-on-quarter due to a pickup in domestic activity between January and March, annual growth figures are predicted to be modest—around 8–10%. This is well below the long-term average of 15%, and may not fully meet investor expectations. The season will start with earnings reports from the IT sector, where results are likely to reflect the current slowdown in global tech spending.

Final Thoughts

Despite mounting global uncertainty, India remains in a relatively strong position. While export-reliant sectors may need to navigate carefully, areas like pharmaceuticals, energy, and domestic-focused industries are poised to do well. As global markets adjust to a new trade reality, India’s selective resilience could offer both stability and opportunity.