Assessing the Impact of Trump's Tariffs on India’s Export-Driven Sectors and Strategic Investment Opportunities in Resilient Industries

The Tariff Shock: Vulnerable Sectors and Systemic Risks

The imposition of 50% tariffs by the Trump administration on Indian exports has triggered a seismic shift in India’s trade dynamics. Sectors like textiles, gems and jewellery, and seafood—accounting for over 40% of India’s U.S.-bound exports—now face existential threats. For instance, the textile industry, which contributes 25% of India’s U.S. exports, is grappling with 63.9% duties, forcing factories in hubs like Tirupur to scale back operations or shut down entirely [1]. Similarly, the gems and jewellery sector, with $10 billion in U.S. exports, is at risk of a 75% decline as buyers pivot to competitors like Vietnam [3]. These tariffs have not only disrupted supply chains but also raised fears of job losses in labor-intensive MSMEs, which dominate these industries [2].

Resilient Sectors: Pharmaceuticals, Electronics, and Petroleum

Amid the turmoil, India’s pharmaceuticals, electronics, and petroleum sectors have emerged as bright spots, shielded from the brunt of U.S. tariffs. These industries, collectively contributing $28.26 billion in U.S. exports in FY2024–25, are now prime candidates for high-conviction investments.

Pharmaceuticals: A Global Generic Drug Powerhouse

India’s pharmaceutical sector, valued at $10.52 billion in U.S. exports in FY2025, has been strategically exempted from tariffs. This resilience is underpinned by India’s dominance in generic drug production, supplying 40% of U.S. generics and 50% of global vaccine demand [1]. Government initiatives like the Production-Linked Incentive (PLI) scheme for pharmaceuticals, with a $1.5 billion outlay, have accelerated domestic manufacturing, enabling firms to scale production of high-value drugs for cancer and diabetes [2]. Leading companies like Sun Pharmaceutical Industries and Zydus Lifesciences have capitalized on this momentum. Sun Pharma reported $474 million in U.S. revenue in Q3 2025, while Zydus saw a 31% year-on-year growth in its U.S. formulations business [3]. With the sector projected to grow at a 10% CAGR and reach $130 billion by 2030, investors are poised to benefit from India’s “pharmacy to the world” narrative [1].

Electronics: A Manufacturing Revolution

India’s electronics sector, with $14.64 billion in U.S. exports, has also been spared from tariffs, thanks to bilateral agreements and the PLI scheme. The sector’s growth is fueled by Apple’s aggressive shift of iPhone production to India, which now accounts for 44% of U.S. smartphone imports [1]. Mobile phone manufacturing alone surged by 146% between FY2020–21 and FY2024–25, while the government’s $7.17 billion India Semiconductor Mission aims to establish domestic chip production by 2025 [4]. Despite temporary reprieves from U.S. tariffs, the sector faces headwinds from Trump’s additional 25% levy on Indian goods linked to Russian oil imports [5]. However, strategic partnerships with global firms like Foxconn and Renesas, coupled with India’s $8.7 billion trade surplus in electronics, position it as a long-term growth story [1].

Petroleum: Energy Diversification and Export Resilience

India’s petroleum exports to the U.S., valued at $4.1 billion in FY2025, remain tariff-exempt, benefiting from the country’s role as a key refiner of Russian crude. While Trump’s tariffs have strained diplomatic ties, India’s energy strategy—prioritizing cost-effective imports and refining capabilities—has insulated this sector from immediate shocks [2]. The government’s push for infrastructure upgrades, including new refineries and petrochemical plants, further strengthens its competitive edge. As global energy markets stabilize, India’s petroleum sector could see renewed demand, particularly in Asia-Pacific markets [4].

Strategic Investment Themes: Policy-Driven Growth and Diversification

India’s resilient sectors are not only tariff-exempt but also supported by aggressive policy frameworks. The PLI scheme, with $20.3 billion in investments realized by March 2025, has catalyzed growth in pharmaceuticals and electronics, while digital infrastructure projects—such as Microsoft’s $3 billion cloud and AI expansion—signal long-term confidence in India’s tech ecosystem [5]. For investors, the key themes include:
1. Pharma Innovation: Firms leveraging PLI incentives to develop high-margin drugs and biologics.
2. Electronics Manufacturing: Companies aligned with Apple’s India strategy and semiconductor partnerships.
3. Energy Diversification: Refiners and exporters capitalizing on global energy shifts.

Conclusion: Navigating Uncertainty with Resilience

While Trump’s tariffs have exposed vulnerabilities in India’s export-dependent sectors, the country’s strategic focus on pharmaceuticals, electronics, and petroleum offers a counterbalance. These industries, bolstered by policy support and global demand, present high-conviction opportunities for investors seeking to hedge against trade volatility. As India diversifies its trade partnerships and strengthens domestic capabilities, the path to long-term growth remains intact—even in a fractured global trade landscape.

Source:
[1] Explained: How will Donald Trump's tariffs impact India's exports to US? These sectors will be the hardest hit [https://timesofindia.indiatimes.com/business/india-business/explained-how-will-donald-trumps-tariffs-impact-indias-exports-to-us-these-sectors-will-be-the-hardest-hit/articleshow/123520096.cms]
[2] India's PLI Schemes Bring in US$21 Billion in Investment in 2025 [https://www.india-briefing.com/news/indias-pli-schemes-bring-in-us21-billion-in-investment-in-2025-38796.html/]
[3] India's Top 25 Pharma Companies by Revenue in 2025 [https://indiapharmafranchise.com/2024/05/01/indias-top-25-pharma-companies-by-revenue-in-2024-unveiling-the-giants-of-the-pharmaceutical-industry/]
[4] India’s Semiconductor Mission and PLI Scheme [https://www.ibef.org/news/electronics-pharma-sectors-corner-70-of-production-linked-incentive-pli-disbursements-in-fy25]
[5] US-India Trade: Electronics Sector Gets 2-Weeks Reprieve from 25% Tariffs [https://timesofindia.indiatimes.com/business/india-business/us-india-trade-indias-electronics-sector-gets-2-weeks-reprieve-from-25-tariffs-effective-august-1-heres-why/articleshow/123014526.cms]