📰Top Industrialists Say They're Immune to Tariffs

Good evening, 

Welcome to the best way to stay up-to-date on India’s financial markets. Here’s what’s in today’s newsletter:

• Maybe tariffs won’t hurt India’s exports, some top businesses say,

• A San Francisco-based short-seller fund shifts focus to India from China,

• and, the U.S. asks India for help on its Adani case. Guess what happened next.

• Finally, we’ll close with Gupshup, a round-up of the most important headlines.

Have a question you want us to answer? Fill out this form and you could be featured in our newsletter.

—Shreyas, [email protected]

Market Update.

Maybe Tariffs Don’t Matter That Much...?

Indian exporters remain confident that U.S. President Donald Trump’s latest tariff threats on automobile and pharmaceutical imports will have a limited impact on their competitiveness, as per top sources.

Pharma: Industry leaders and executives from both sectors believe that any broad tariff hike would affect competitors across Asia equally, minimizing any disadvantage for Indian firms. Raja Bhanu, director general of the Pharmaceuticals Export Promotion Council, noted that India’s generic drugs — accounting for over 40 percent of U.S. generic prescriptions — are unlikely to suffer significantly. Bhanu emphasized that higher tariffs would impact all major exporters similarly, preserving India’s competitive edge.

Trump recently indicated potential 25 percent tariffs on imports of autos, semiconductors, and pharmaceuticals, with an announcement expected as early as April 2. While this could mark a major escalation in the ongoing US trade war, Indian industry leaders suggest strategic policy adjustments could mitigate potential damage. For instance, Bhanu proposed that India eliminate existing tariffs on US pharmaceutical formulations, potentially reducing the likelihood of retaliatory measures. India exported $8.7 billion (₹756.9 billion) worth of pharmaceuticals to the US in 2023-24, and ongoing trade negotiations between the two nations could further cushion any impact.

Auto companies: Similarly, auto component manufacturer Sona BLW Precision Forgings, which derives 40 percent of its revenue from the US, foresees minimal disruption. The CEO highlighted that most auto components imported by India carry a modest 7.5 percent duty, suggesting any reciprocal tariffs by the US would have limited consequences.

Message from our Sponsor

Over the last seven elections, this asset class has outpaced the S&P 500

Instead of trying to predict which party will win, and where to invest afterwards, why not invest in an ‘election-proof’ alternative asset? The sector is currently in a softer cycle, but over the last seven elections (1995-2023) blue-chip contemporary art has outpaced the S&P 500 by 64% even despite the recent dip, regardless of the victors, and we have conviction it will rebound to these levels long-term.

Now, thanks to Masterworks’ art investing platform, you can easily diversify into this asset class without needing millions or art expertise, alongside 65,000+ other art investors. From their 23 exits so far, Masterworks investors have realized representative annualized net returns like +17.6%, +17.8%, and +21.5% (among assets held longer than one year), even despite a recent dip in the art market.*

It's easy to get started at Masterworks, and our readers can SKIP THE WAITLIST HERE.

Past performance not indicative of future returns. Investing Involves Risk. See Important Disclosures at masterworks.com/cd.

A Major Fund Sets Its Eyes on India, and Away from China.

Carson Block, CEO of Muddy Waters Capital, is setting his sights on India to explore launching a fund focused purely on Indian stocks. Block, known for his critical stance on Chinese markets, remains cautious about investing in China despite recent rallies, citing geopolitical risks and unreliable corporate accounting practices. Muddy Waters Capital is known for publishing investigative research on companies it trades on, most famous for exposing fraud at Sino-Forest Corp, a Canadian-listed Chinese company.

Pros and cons: Block has highlighted India’s growing prominence in global finance, predicting that “a wall of money will be thrown at India,” much like China in previous years. Block, alongside his business partner Freddy Brick, plans to visit Mumbai next week for the first time to meet with brokers, funds, and business leaders to better understand the local investment landscape. Although he is considering a long-short fund, he expressed concerns about India’s capital gains tax policies.

Block’s interest in India comes at a time when foreign investors have pulled over $10 billion (₹870 billion) from Indian equities this year, amid lukewarm earnings and growth projections. Despite this, Block remains optimistic about India’s long-term prospects.  

China skepticism: Muddy Waters gained prominence by exposing fraud in several Chinese firms. Block continues to view China with skepticism, pointing out the risks of a potential China-Taiwan conflict and the lack of trust in Chinese financial data. Although Chinese equities have rallied — boosted by President Xi Jinping’s support for the private sector and advancements in artificial intelligence — Block remains wary, having advised against investing in Chinese stocks last October.

Remember the last guy? Nathan Anderson, founder of Hindenburg Research, famously took on the goliaths of India, exposing alleged corruption at the SEBI and in the top ranks of the Adani Group. Later, he shut down his market research group.

The US Asks for Help Against Adani.

Speaking of which: Adani. The U.S. Securities and Exchange Commission (SEC) has sought assistance from Indian authorities in its investigation of Gautam Adani and his nephew, Sagar Adani, over allegations of securities fraud and a $265 million (₹23.1 billion) bribery scheme. According to a court filing in a New York district court on Tuesday, the SEC is working to serve its complaint to both individuals, who are currently in India, by leveraging the Hague Service Convention.

Surprise...India is not helping. Neither Adani Group nor India’s law ministry has responded to requests for comment. The investigation alleges that Gautam Adani bribed Indian officials to secure agreements for Adani Green Energy, a subsidiary of Adani Group, to supply electricity. The SEC claims that Adani subsequently misled U.S. investors by providing false assurances regarding the company’s anti-corruption practices.

Adani Group has denied the allegations, labeling them "baseless" and expressing intentions to pursue all legal options. In response to the indictment, Adani Green Energy announced in January that it had appointed independent law firms to review the charges.

The case has also sparked political controversy in India. The opposition Congress party has accused Modi of shielding Adani and has called for the billionaire’s arrest. Modi, however, dismissed these claims, stating during a recent visit to Washington that the Adani issue was not discussed with U.S. President Donald Trump, describing it as a private matter not involving government leaders. Continued prosecution has led to a twist in the case considering many thought that Trump would shield a key Modi ally. 

Gupshup.

Macro

• Indian electronics manufacturing companies, including Amber Enterprises and Syrma SGS, have seen their stock prices drop nearly 30 percent amid a broader market downturn. However, analysts suggest the selloff may be excessive, as many firms reported solid quarterly earnings, indicating potential for a rebound. Electronics manufacturing has been driven down by more macro factors pertaining to tariffs and export ability. 

• Indian companies are increasingly discussing hedging strategies as the rupee drops 3 percent against the dollar in three months. Mentions of ‘hedging’ in earnings calls tripled, with firms like Titan and Hindalco addressing forex risk management. The RBI allowing for more variability in the rupee value has led to more self-management regarding rupee hedging.

Equities

• Sanjeev Gupta’s Australian steelworks in Whyalla has been placed into administration by the South Australian government due to unpaid royalties and financial instability. Despite GFG Alliance’s struggles, officials believe the project has long-term viability under new ownership. Being taken control of signifies the operating issues that various Indian companies have had in South Africa due to restrictive macro factors. 

• iPhone parts manufacturer, Murata, is considering shifting some production to India as a part of a broader supply chain rearrangement. The company has leased a plant in Tamil Nadu to package and ship capacitors starting in 2026. Apple is planning on moving up to 25 percent of all iPhone production to India.

• GQG Partners, Fidelity, and other major investors bought into Bharti Airtel as founder Sunil Bharti Mittal sold a $976 million (₹84.9 billion) stake. Bharti Telecom now holds 40.47 percent of Airtel, reinforcing its position as the controlling shareholder.

• Indian pharma stocks fell 2 percent to a seven-month low after U.S. President Trump announced plans for 25 percent tariffs on pharma imports. Major companies like Sun Pharma and Dr. Reddy’s saw significant declines. That being said, most see pharma as idiosyncratic to tariffs due to low percentages being put on drug products. 

• Tesla has chosen showroom locations in New Delhi and Mumbai, advancing its plans to sell electric cars in India after a delay in 2022. Tesla moves closer to its long-delayed plans to sell its electric cars in India.

Alts

• India recorded over 1,000 stomach flu outbreaks in 2024, the highest since 2009, highlighting public health risks from contaminated water and food. The post-Covid disease resurgence, antibiotic resistance, and urbanization may be worsening the severity of infections.

• Qatar plans to invest $10 billion (₹868.5 billion) in India and open a sovereign fund office to strengthen bilateral ties. The two nations also signed agreements on strategic partnerships and taxation but provided no investment timeline. India has drawn new ties to the Middle East due to needing new sources of oil after Russian sanctions. 

• Thousands of Indian investors lost nearly $100 million (₹8.67 billion) in a Ponzi scheme run by Falcon Invoice Discounting, promising high returns. Two individuals have been arrested in connection with the fraud.

Policy

• India's market regulator, SEBI, has proposed technology-based measures, including SIM card-binding, to enhance security and prevent unauthorized transactions in investors' trading accounts. Each client gets a unique code that allows them to log into their trading account. This follows more technology changes such as allowing algo trading; the multiple changes are to empower retail traders who have suffered large losses due to institutional activity in the country.

See you Thursday.

Written by Yash Tibrewal. Edited by Shreyas Sinha.

Disclaimer: This is not financial advice or recommendation for any investment. The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.