Investing.com -- Indian exporters of auto parts and solar panels could face renewed pressure from Donald Trump’s “Big Beautiful Bill,” even as the legislation may boost Indian IT services.
“The phase of policy volatility continues, and yet again, we have the US initiating something with global ramifications,” analysts at Bernstein say on the bill and the upcoming expiry of a pause on reciprocal tariffs.
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Proposals to keep import duties elevated which are still under discussion, would amount to a further $1.5tn –$2 trillion in de facto tariffs, leaving limited room to scale back existing trade barriers.
While the bill could spur US consumption, capital expenditure, and digital modernisation, areas where Indian tech firms stand to gain, it also introduces headwinds for manufacturing exports.
The removal of incentives for electric vehicles and the bill’s emphasis on petrol-powered cars could weigh heavily on Indian auto component makers.
Solar equipment exports, which have recently strengthened, may also be at risk.
Another problem is Section 899, which could classify India as a “Discriminatory Foreign Country,” potentially triggering higher US taxes on Indian IT and pharmaceutical companies operating there.
A proposed cut in the remittance tax to 1 per cent would have a limited impact, reducing annual outflows from the US to India by just $110mn, compared with the $38bn total.
“The downside is significant, and the oceans murky,” Bernstein said, adding that the eventual impact will depend on the final shape of tariff provisions and any potential bilateral trade deal.
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