With former US President Donald Trump’s administration reintroducing steep tariffs on China, global markets are bracing for volatility. However, India is emerging as a relative winner, thanks to its strong domestic fundamentals and strategic position in global supply chains, according to Pankaj Tibrewal, Founder and CIO of IKIGAI Asset Manager.

Tibrewal told CNBC-TV18 that India continues to hold a competitive edge over other emerging markets, even as the US begins enforcing 104% duties on imports from China. The announcement, made on Tuesday, was followed by the US initiating dialogues with other key trade partners, sparking global trade recalibrations.

India Not a Direct Target, But Still Influenced

Although India isn't a direct target of these tariffs, its role in global trade makes it susceptible to ripple effects. Tibrewal emphasized that an escalating US-China trade war could dampen global economic momentum, but India’s limited dependency on exports to the US (only around 2%) insulates it from significant financial damage.

More importantly, India’s share in sectors like generics, chemicals, and IT, combined with its low-cost, skilled labour base, gives it a structural advantage. “The tariff moves by the US will help reposition India better in the global value chain,” said Tibrewal.

Tariff Implications on Pharma – India in Focus

One of the major sectors under scrutiny is pharmaceuticals, where the US has highlighted profit routing through Ireland and the Cayman Islands. According to Tibrewal, the US aims to bring these profits back home.

But here’s the catch: “Indian generics manufacturers simply don’t have the balance sheets to spend $8-10 billion in US capex. So, these tariffs won’t shift the dial much for Indian pharma,” he said.

India is vital to US healthcare, with 90% of drugs in the US being generics, and 60% of those originating from India. Tibrewal warned that US consumers may face supply constraints if thin-margin Indian manufacturers can’t absorb tariff costs.

Still, he remained optimistic: “CDMO players in India may stand to gain as global supply chains diversify away from China. A lot of pharma work that went to China over the past decade may return to India.”

IT and Services: Exempt, But Not Immune

On the IT front, India has been spared direct tariffs, which offers a silver lining. However, Tibrewal cautioned against possible cuts in discretionary IT spending as businesses brace for uncertainty.

“Growth might slow down, and many firms may not provide forward guidance. But once we see a 5-6% free cash flow yield, the downside risk will be limited,” he added.

This suggests a wait-and-watch approach for IT investors, especially in large-cap firms with stable global contracts.

Export Competitiveness: India vs. Peers

While the US’s 26% tariff may appear steep, India still fares better than rivals like Bangladesh and Vietnam, who face even harsher duties, according to Tibrewal. This allows India to maintain a trade advantage—especially in textiles, chemicals, and electronics.

He believes that India’s broader macro story remains intact, and that global trade tensions may inadvertently fuel India’s export engine, provided the country is prepared to capitalise on it.

Domestic-Focused Sectors Hold the Key

As global trade remains volatile, Tibrewal recommends looking inward: “Banking, NBFCs, consumption, and capital goods will outperform in this environment,” he said.

He pointed out that valuations in many sectors have corrected significantly, opening opportunities for value investors and long-term capital allocators.

“This year is going to be tough, no doubt,” he noted. “But in times of uncertainty, bottom-up stock picking will win. The next 18-24 months are made for selective investors.”

Chemical Sector: Another Rising Star

Tibrewal also highlighted Indian chemical companies as major beneficiaries of China’s trade squeeze. “With China losing its low-cost edge, Indian firms can gain share in specialty chemicals and agrochemicals,” he said.

Many Indian players have already expanded capacities, while others are receiving global inquiries due to China+1 supply chain strategies being accelerated by geopolitical risks.

Market Snapshot

As of 11:45 a.m.:

• Nifty Pharma: ₹20,070

• Nifty Metals: ₹7,840

• Nifty IT: ₹32,414

These index levels reflect investor caution but also sectoral divergence, with pharma and IT seeing relative stability, while metals remain exposed to global trade shocks.

Final Outlook

Pankaj Tibrewal’s outlook provides a measured yet optimistic view for India amid global uncertainty. His belief in India’s internal resilience, sector-specific strength, and low export dependency offers a compelling narrative for investors.

As the US-China tariff war unfolds, India has a unique opportunity to expand its footprint in global trade, especially if it focuses on scaling capacity, improving ease of doing business, and attracting global capital.

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