In this episode of Two Sharp with ET, we delve into the dual challenges facing India—Trump’s sweeping reciprocal tariffs and a significant market downturn just before April 2. As one of the countries with the highest export risks, India’s auto, textiles, electronics, and IT sectors are preparing for serious repercussions. Emkay Global estimates that the export losses could reach up to $31 billion, representing nearly 0.8% of India’s GDP. Although the pharmaceutical sector may be insulated from the worst effects, the market has already responded sharply, with the Sensex dropping 1,390 points and Nifty sliding below 23,200. In the meantime, New Delhi is opting for diplomacy instead of retaliation. Could a trade agreement be on the horizon? Nisha Poddar analyzes the situation.

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In this episode of "Two Sharp with ET," the focus is on the significant economic challenges facing India amidst the backdrop of President Trump's implementation of reciprocal tariffs and a notable market decline ahead of April 2. The country is currently dealing with substantial export risks, particularly in key sectors such as automotive, textiles, electronics, and information technology. Analysts from Emkay Global estimate that India's export losses could reach as high as $31 billion, which amounts to approximately 0.8% of the nation’s GDP.

The Sensex index has already experienced a steep decline, dropping 1,390 points, while the Nifty has fallen to below 23,200. This sharp market reaction underscores the severity of the situation and the potential ramifications of the tariffs on various industries. Among these sectors, the pharmaceutical industry appears to be somewhat insulated from the negative effects, suggesting that not all sectors will face equal hardship during this turbulent period.

In response to these challenges, the Indian government is opting for diplomacy rather than retaliation against the tariffs. This diplomatic approach raises questions about the possibility of reaching a trade deal that could mitigate the impacts of the tariffs on India's economy. Nisha Poddar emphasizes the importance of diplomatic engagement in navigating this complex situation and explores potential paths forward for India as it seeks to protect its economic interests.

The episode delves into the potential implications of these tariffs and economic conditions, highlighting the need for strategic adjustments and proactive measures in sectors that are likely to be most affected by the ongoing trade tensions. The government’s choice to pursue dialogue instead of confrontation may ultimately play a crucial role in shaping the future of India's trade relationships and economic stability.