Higher tariffs may see reduced trade, low investor mood in India: KPMG

Higher US tariffs may lead to potentially reduced trade, cautious hiring and subdued investor sentiment in India, according to KPMG, which recently said micro, small and medium enterprise (MSME) clusters are encountering increased exposure due to limited customer diversification and fragile supply chains as these contribute over 45 per cent to the country’s exports.

Over 30 per cent of India’s exports in textiles, pharmaceuticals, smartphones, gems and marine products are directed to the United States, making them more vulnerable to tariff shifts.

India’s textile exports could encounter increased competition as other nations gain ground in the US market due to lower tariffs and cost advantages.

Higher US tariffs may see reduced trade, cautious hiring and subdued investor sentiment in India, according to KPMG.
MSME clusters are encountering increased exposure due to limited customer diversification and fragile supply chains, a KPMG report noted.
India’s textile exports could encounter increased competition as other nations gain ground in the US market due to lower tariffs and cost advantages.

A KPMG research report recommended targeted financial interventions like subsidies, working capital support and export insurance for safeguarding MSMEs and employment-intensive clusters, ensuring short-term stability and long-term competitiveness.

For sustained trade resilience, India could advance strategic dialogues with viable partners to unlock market opportunities in high-growth sectors. A diversified export approach would further support a balanced and robust trade ecosystem, it noted.

These efforts can be reinforced through deeper bilateral collaboration and enhanced industrial capabilities via technology partnerships, the report added.

Fibre2Fashion News Desk (DS)