India's trade, energy outlook favourable amid global tariff volatility: Report
New Delhi: India is poised to benefit from global supply chain diversification and energy transition trends amid heightened trade volatility following the United States' imposition of steep tariffs on imports from China and other key economies, according to a report by
Asit C. Mehta Investment Interrmediates
Ltd. (ACMIIL), a Pantomath Group Company.
The report, titled Markets 'TARIFF'IED – Way Ahead, noted that India's demographic advantage, low export dependency, and growing renewable energy infrastructure make it a natural alternative for global manufacturers seeking tariff-neutral geographies. India's merchandise exports to the U.S. account for only 2.1% of its GDP, insulating it from external shocks compared to other export-heavy economies.
India's reciprocal tariffs of 26% are moderate in comparison to the U.S.'s 145% hike on Chinese imports, improving its attractiveness as a trading partner. The report also noted that India is in advanced stages of finalizing a bilateral trade agreement with the U.S., aimed at facilitating zero-duty imports under India's Production Linked Incentive (PLI) scheme and pushing bilateral trade to $500 billion by 2030.
In the energy sector, the report highlighted India's progress toward its 2030 target of achieving 500 GW of non-fossil fuel capacity. As of January 2025, the country's total installed capacity reached 466.26 GW, comprising 100.33 GW from solar and 48.37 GW from wind. The expansion of solar and wind energy has spurred investment in transmission and distribution (T&D) infrastructure and grid modernization.
The Union Budget for 2025–26 allocated ₹11.21 lakh crore—or 3.1% of GDP—for capital expenditure, with significant allocations to power, railways, and digital infrastructure. The report projected that this would support further growth in sectors tied to energy and infrastructure development.
The report also projected India's GDP growth at 6.5% in FY26, supported by macroeconomic stability and a fiscal deficit expected to reduce to 4.9% in FY25. A more accommodative stance from the Reserve Bank of India and anticipated repo rate cuts are expected to encourage private investment.
On the sectoral front, ACMIIL identified high-conviction investment opportunities in banking, consumption, defense, capital goods, data centers, healthcare, and infrastructure. The defense sector received a budget of ₹6.81 lakh crore for FY26, including ₹1.8 lakh crore in capital expenditure, with 75% reserved for domestic procurement.
India's data center capacity reached approximately 1,150 MW as of December 2024 and is expected to attract ₹50,000 crore in investment by 2026. Mobile data traffic grew at a 25% CAGR over the past five years, reaching 24 GB per user per month in FY24, and is expected to reach 33–35 GB by FY26.
The hospital sector is projected to see a 32% increase in bed capacity by FY27, with expansion focused on Tier 2 and smaller cities. The capital goods and engineering sectors are expected to benefit from Make in India, rising domestic investment, and global supply chain shifts.
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