Kotak AMC’s Nilesh Shah: 50% US tariffs could hit trade, govt support may be needed

Nilesh Shah, MD of Kotak Mahindra AMC – that manages funds worth $5,788.76 million as on July 31, 2025 – said a 50% US tariff would severely affect some sectors. “At a 25% tariff, the hit is on volumes and margins. At 50%, it becomes more like a trade embargo,” he explained. Sectors such as aquaculture, textiles, chemicals, and auto components will need to find alternative markets, while the government may have to step in with credit support or incentives.He added that while tariffs will certainly impact specific industries, it does not mean the Indian economy is in danger. According to him, boosting domestic demand and policy measures like goods and services tax (GST) rationalisation can help cushion the effect.

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Dr Amitendu Palit, Senior Research Fellow at ISAS-NUSsaid the White House order is “very complicated,” with exemptions for some products and clarity that “there’s not going to be any stacking of the section 232 tariffs” on steel, aluminium and automobiles. He noted that garments and other export sectors may face short-term pressure but stressed that “markets continue to retain their faith in the long-term prospects of the Indian economy.”Palit added that services trade, particularly in IT and professional services, has so far been unaffected. “It is in the United States’ business interest to maintain this services trade in as robust a fashion as possible,” he said, pointing to the deep investments of US tech firms in India. He argued that this part of the India–US relationship could help balance tariff pressures over time.

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Former Commerce Secretary Ajay Dua said the tariff move should be seen in a wider geopolitical context. “From tomorrow, we are liable to pay a 50% duty on all our exports to the US… but that shouldn’t bother us too much and for too long,” he said, calling India “collateral damage” of tensions between Washington and Moscow.

Palit also highlighted the EU’s sanctions, which cap Russian oil purchases below $60 per barrel. He noted that while costs could rise if India shifts toward more US oil, the overall macro impact is expected to be limited. “The Reserve Bank of India has held GDP growth unchanged at 6.5%,” he said, suggesting any change would likely be small.

Both experts agreed that while exporters may face near-term strain, India’s growth fundamentals and long-term investment outlook remain strong.

For the full interview, watch the accompanying video

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