India can make tariff zero in many products if it plays its cards well: Enam Holding's Sridhar Sivaram

The ongoing tariff war has many moving parts, and if India plays its cards well, it stands to benefit, as claimed by Enam Holding’s Sridhar Sivaram.

About tariff wars

Talking about the implications of the tariff war on Moneycontrol’s 'Wealth Formula' podcast, he said the US may want to reduce its dependence on China, but it will not happen soon since Beijing plays the role of the “manufacturing hub of the world".

Citing the example of Apple, which has been increasing production in India, the market veteran said there is scope for more domestic manufacturing if the country can adjust its trade policy.

“This could happen with a lot more countries if we play our cards well, make the tariff zero in many of the products,” said Sivaram.

"I don't really know why we should have such high tariffs for some of these products. And even if the tariffs were made zero, it's very difficult for US companies to actually compete with the Indian products," he added. [Source: MoneyControl]

He further explained that he talked to a tire company that claimed India has almost a 15% tariff on tire imports, and the US has some 2% tariff. So even if you make it zero on either side, rubber is produced in India. So, we have the inherent advantage of raw material, he said.

From a valuation standpoint, Sivaram said not every sector may benefit, though.

“For example, in pharmaceuticals, India is competitive in generics, but when it comes to liquor, India is not as competitive as US, where wines may be cheaper. Similarly, in solar panels, India is not competitive,” said the investor.

According to him, one needs to figure out a balance.

"One of the textile manufacturing company mentioned that we have a free trade agreement with China, with Bangladesh. And if we don't control that, you could get dumping coming from China into Bangladesh and to India.”

Mentioning the right balance, he further said, “With the tariffs that the US has put on China, those goods will surely find its place in some form or the other, in some market or the other, which could be deflationary, which could have an impact on many of our companies.”

Sridhar Sivaram said ‘new learnings’ are emerging constantly, hence it may be prudent to stay cautious right now.

Also read: ‘SRK was creating awareness for new segment, Messi was talking about love for learning’: Byju’s founder (startuppedia.in)