Why are Trump tariffs a silver lining for India? Ventura Securities explains

India appears to be one of the key beneficiaries of the US government's sweeping new tariff policy, according to domestic brokerage house Ventura Securities. While the US has imposed reciprocal tariffs as high as 26 per cent on Indian goods, the rate is relatively modest compared to the steep penalties placed on other global trading partners. Ventura noted that this underlines India’s increasingly favourable positioning in global trade dynamics amid the recalibration of US international commerce strategies.

Tariffs Fully Priced In, Room for Constructive Outcomes

Ventura said the long-anticipated tariff action by President Donald Trump seems to be fully priced in by equity markets. The implementation of only 50 per cent of the proposed counter-tariffs signals a diplomatic balancing act, indicating that negotiation channels remain open. According to Ventura, this cautious execution could pave the way for constructive developments rather than fresh disruptions in global trade sentiment.

Global Supply Glut, US Slowdown May Drive Deflation

Ventura further believes that Trump’s tariff strategy could trigger a demand shock in the US, leading to a global supply glut. This, it said, may result in broader disinflationary pressures, cooling inflation and lowering bond yields globally. However, Ventura warned that this may also mark the beginning of an economic contraction in the US. Given the country's pivotal role in world trade—especially with Europe, China, and East Asia—the resulting excess supply may spill across borders, contributing to supply-side deflation worldwide.

India Well-Positioned in Decoupling From China

Amid rising trade barriers, Ventura highlighted that India's relatively mild tariffs put it in a strategic position to benefit from the shifting of global manufacturing bases away from China. Even prior to Trump’s resurgence, the Biden administration had initiated a decoupling drive from China.

Ventura said this trend will only accelerate, presenting India with an opportunity to emerge as a key manufacturing hub. With India’s current exports totaling around $750–800 billion—compared to China’s $3.3 trillion—there remains substantial headroom for growth, it added.

Structural Tailwinds to Consumption and Manufacturing

Unlike the COVID-19 crisis, which caused simultaneous demand and supply shocks, Ventura noted that the current situation is more supply-driven, stemming from structural shifts in global manufacturing. India’s export potential is set to rise with increasing capacities and favourable policies. Ventura further highlighted that a possible global interest rate reduction could stimulate consumption and provide a further tailwind to India's economy.

India’s Strengths Extend Beyond a Low Base

According to Ventura, India’s competitive edge is not limited to a lower base of exports. It also benefits from a large pool of skilled labor, a strong legal and regulatory system, political stability, and favorable geopolitical relationships—all of which enhance its appeal as a preferred trade and investment partner amid global realignment.

Sector Preferences: Ventura’s Tactical Overweight and Underweight Calls

Underweight Sectors:

Auto & Auto Ancillary: Ventura warned that near-shoring could divert manufacturing from India to the US. Combined with domestic headwinds and a cyclical downturn, the auto sector faces pressure.

IT & ITES: Overconcentration of capital in the US tech space ('Magnificent 7') could burst, reducing allocations to Indian IT. Ventura added that stocks remain fairly valued despite recent corrections, while headwinds from AI disruption and lower US client spending persist.

Gems & Jewellery: Ventura expects higher US tariffs and elevated gold prices to dampen exports from this segment.

Overweight Sectors:

Banks: Despite street consensus turning cautious, Ventura sees value in PSU and private banks due to attractive valuations and healthy credit growth. Top picks include Canara Bank, PNB, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, and City Union Bank.

Infrastructure & Power: With a likely fall in interest rates and emphasis on domestic coal sourcing, Ventura is positive on Adani Enterprises, Adani Power, Adani Green Energy, Adani Energy Solutions, NTPC, Power Grid Corp, IRB Infrastructure, and Coal India.

Textiles: Ventura expects Indian textile firms to benefit as key global competitors face steep tariffs. Preferred names include Welspun Living, Indo Count Industries, Gokuldas Exports, Kitex Garments, and KPR Mills.

Electronics: A fresh ₹22,919 crore PLI scheme will accelerate domestic manufacturing. Ventura is bullish on Voltas, Blue Star, Virtuoso Optoelectronics, Electronics Mart India, and Aditya Vision.

In Ventura’s view, the global trade landscape is undergoing a fundamental reset—and India is uniquely positioned to capitalize on this transition. With modest tariffs, a growing manufacturing base, and structural advantages, India could become a critical cog in global supply chains. While select sectors face challenges, Ventura believes that strategic bets in pharma, banking, infrastructure, textiles, and electronics can yield strong returns as the world adjusts to a new trade order.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.