MUMBAI: Fitch Ratings has cautioned that while Indian corporates currently face limited direct exposure to recent US tariff hikes, the risks are mounting — particularly for pharmaceuticals, chemicals, and oil-linked sectors. The rating agency said a US-India trade deal would be key to mitigating these pressures.
Fresh tariff measures
The US imposed 25 per cent “reciprocal” tariffs on Indian goods from August 7, 2025, followed by an additional 25 per cent levy tied to oil imports from Russia, effective August 27. Fitch noted that while India’s direct automotive exports to the US are small, the broader outlook for the auto sector has weakened.
Samvardhana Motherson International Ltd (SAMIL), which derives about 20% of its sales from the US, largely through production bases in the US and Mexico, could see limited upside in its credit profile. Fitch revised its outlook on SAMIL to Stable from Positive in May, citing tariff-driven uncertainty in the global auto market.
Pharma and chemicals vulnerable
The US remains a critical market for Indian pharma. Biocon Biologics Ltd earns nearly 40 per cent of its revenues from the US, with products manufactured in India and Malaysia. Fitch warned that fresh tariffs on pharma products, if imposed, would hit Biocon’s operating performance and erode its ability to pass on higher costs.
Crop-protection chemicals major UPL Ltd also faces potential pressure, with the US contributing 10-12% of revenues. Tariffs could erode UPL’s competitive position by narrowing the gap with Chinese suppliers. However, Fitch said UPL’s diversified portfolio should help it achieve its FY26 EBITDA growth guidance of 10-14 per cent.
Oil import dependence
Indian oil marketing companies (OMCs) such as Bharat Petroleum, Indian Oil, and Hindustan Petroleum rely on Russian crude for 30-40% of imports. While discounted Russian crude has supported profitability, any restrictions on imports would dent OMC EBITDA by an estimated 10 per cent. Fitch said the ratings of state-backed OMCs would remain intact, but HPCL-Mittal Energy Ltd, with a weaker buffer, could face strain.
Limited impact on IT, domestic sectors
Fitch expects minimal direct tariff impact on Indian IT services, upstream and downstream oil and gas, cement, construction, telecom and utilities. But it warned that sustained higher tariffs in the US could trim India’s FY26 GDP growth forecast of 6.5 per cent and indirectly weigh on corporate performance.
“Increased US tariffs could also lead to diversion of supply to other markets, including India, putting pressure on domestic prices of steel, chemicals and other products,” Fitch said.