New Delhi: Indian equity markets could come under pressure over the fresh tension between the US and India over trade as India retaliated with tariffs on 29 American products, starting from Sunday.
This decision followed the US ending India's $5.6 billion trade concessions under the Generalised System of Preferences (GSP) programme, report agencies.Last year, the US imposed duties on steel and aluminium from India following which a retaliation was deferred until now.
From Sunday, India has said it will impose tariffs on 29 US products, including almonds and apples. The new duties, some as high as 70 percent, are in response to Washington's refusal to exempt Delhi from higher taxes on steel and aluminium imports.
Earlier this month, US President Trump also announced the US was withdrawing India's preferential trade treatment. In response on Friday, India's Ministry of Finance said the decision was in the "public interest".
Several analysts have said investors sentiments would be impacted.
"Tariffs to the tune of $400-450 million from all bilateral trade of 142 billion dollars with the US — this shows that the impact is insignificant," said Ajay Sahai is the Director General and CEO of the Federation of Indian Export Organisations (FIEO).
The US-China trade war has long troubled the global financial markets. The damage was such that the global growth took a beating, as noted the International Monetary Fund (IMF)."Local investors will be worried as to how US could react to this. However, FIIs will wait for any such move by the US before feeling the Indian market," Deepak Jasani of HDFC Securities told IANS.
"$400 million is not a big number, but 29 items consist of almonds, walnuts and apples which affect their farmers. This could trigger a response and which will not bode well for the Indian markets," Jasani added.
The Indian market, which is currently dealing with slowdown concerns, will not react well if the US announces fresh tariffs, several analysts said.