# us tariffs, bank earnings, fed independence & india's manufacturing upswing

what matters now

Banking heavyweights HDFC Bank and ICICI Bank delivered strong Q4 results, with profit growth of 6.7% and 18% respectively, signaling robust financial health in India's banking sector. Global markets experienced a significant rebound despite recession fears, with Trump signaling a pause in tariff escalations against China while still considering firing Fed Chair Jerome Powell. India's pharmaceutical exports crossed $30 billion for the first time, while simultaneously becoming more attractive for manufacturing as tariffs make it relatively cheaper than regional competitors for US buyers. Elon Musk prepares to visit India later this year after discussions with PM Modi about technology collaboration, as PhonePe converts to a public company ahead of its IPO.

Banking titans show resilience amid market turbulence

The financial sector emerged as a bright spot this week, with HDFC Bank reporting a 6.7% year-on-year increase in net profit to ₹17,616 crore, comfortably exceeding analyst estimates of ₹16,908 crore. This performance came despite a 9% decline in operating profit, highlighting the bank's ability to manage expenses and provisions effectively. The bank's asset quality improved significantly, with gross non-performing assets (NPA) ratio decreasing to 1.33% from 1.42% in the previous quarter.

Not to be outdone, ICICI Bank delivered an even more impressive quarterly result with an 18% year-on-year jump in net profit to ₹12,630 crore, alongside an 11% increase in net interest income to ₹21,193 crore. The bank's net interest margin improved to 4.41%, up from 4.25% in the previous quarter. This performance underscores ICICI's strong positioning in the Indian banking landscape, where it has maintained robust growth despite challenging economic conditions.

The overall banking sector appears poised for continued strength, with the Nifty Bank index approaching record highs. Analysts predict it could reach the 55,000-57,000 range, supported by favorable monetary policies and falling deposit rates. This momentum arrives at a critical time, as banks strategically cut savings account interest rates by 25 basis points to enhance profitability amid declining CASA (Current Account Savings Account) ratios. This move, implemented by HDFC Bank, ICICI Bank, Axis Bank, and Federal Bank, is expected to improve net interest margins by approximately 5 basis points for every 25 basis points reduction.

Meanwhile, Yes Bank showed signs of recovery with a substantial 63.3% year-on-year increase in net profit to ₹738.1 crore, though its quarterly sequential growth of 21% highlights persistent challenges. The bank's improved asset quality metrics, with net NPA falling to 0.3% from 0.5% in the previous quarter, suggest its restructuring efforts may finally be bearing fruit.

The Trump factor: tariffs, recession fears, and Fed independence

Global markets navigated a volatile week as Donald Trump's economic policies and pronouncements created both turbulence and relief. After imposing substantial tariffs earlier in the month, Trump provided some respite by announcing a 90-day pause on further tariff escalations against China, indicating that Chinese officials had reached out for negotiations. This announcement triggered a powerful market rebound, with the S&P 500 recovering modestly despite remaining 14% below its February peak.

However, a more concerning storyline emerged as Trump began publicly contemplating whether to fire Federal Reserve Chair Jerome Powell. White House economic advisor Kevin Hassett confirmed that the administration is actively exploring the legal implications of dismissing Powell, who has consistently maintained the Fed's independence. Trump has criticized Powell for failing to lower interest rates, arguing that a "competent Fed chair" would have already done so to support the economy.

The potential dismissal of Powell represents a significant threat to the Fed's credibility and independence, which economists warn could destabilize markets and increase inflation risks. The situation is particularly troubling as it coincides with economists upgrading the probability of a US recession from 25% to 45%. The Federal Reserve has maintained its benchmark policy rate between 4.25% and 4.50% since December, navigating a precarious balance between controlling inflation and supporting economic growth.

For Indian markets, these developments have created both challenges and opportunities. Arvind Sanger of Geosphere Capital suggests that India might serve as a "silver lining" amid global economic turbulence, with its robust domestic economy potentially insulating it from the worst effects of a US recession. This sentiment is echoed by other analysts who recommend focusing on domestically-oriented sectors like banking, consumer goods, and healthcare rather than export-dependent industries that would be more vulnerable to global economic downturns.

The immediate effects of the tariff announcements are already visible, with data from the first week of April showing global TEU container bookings down 49% compared to the last week of March, while US imports and exports fell 64% and 30% respectively. These dramatic figures suggest the tariff war's impact on global trade could be more severe and immediate than previously anticipated.

India's export sector finds unexpected opportunity in US tariffs

In an ironic twist, Trump's tariff policies may be creating significant advantages for Indian exporters, particularly in the textile and manufacturing sectors. The 26% tariff imposed on Indian imports to the US looks steep in isolation, but compared to the tariffs facing regional competitors—46% for Vietnam, 37% for Bangladesh, 49% for Cambodia, and a staggering 245% for China—India suddenly appears competitively positioned.

This relative advantage is already translating into tangible business opportunities. US buyers are reportedly shifting orders to India, with textile and toy manufacturers seeing capacity utilization jump from 70% to 90-95%. Small and medium enterprises are reporting a flood of inquiries from American companies seeking alternatives to their existing supply chains.

The effects are visible in export statistics. Engineering, textile, and apparel exports from India grew by over 6% during the fiscal year 2024-25 compared to the previous year. Engineering goods recorded a 6.74% year-on-year increase, with total shipments reaching $116.67 billion, while textile and apparel exports experienced a 6.32% growth. The apparel segment specifically surged by 10.03%, driving the overall increase.

However, the picture isn't uniformly positive. There are concerns about the impact of additional duties imposed by the US on iron, steel, and auto components, which could result in an annual drop of $4-5 billion in engineering exports to the US. Furthermore, a potential US recession would dampen demand across all categories, regardless of relative tariff advantages.

Credit rating agency CRISIL offers a more reassuring assessment, reporting that US tariffs are expected to have minimal impact on the credit quality of Indian corporations. Their analysis indicates that less than 0.25% of the approximately 7,200 companies rated by CRISIL are likely to be significantly affected, primarily in manufacturing sectors like diamond polishing, textiles, pharmaceuticals, chemicals, automotive components, and electrical machinery.

India's pharmaceutical exports reach milestone amid shifting global landscape

India's pharmaceutical sector achieved a significant milestone in fiscal year 2025, with exports crossing the $30 billion threshold for the first time. Total exports reached $30,467.32 million, representing a 9.39% increase from the previous year's $27,851.70 million. This achievement exceeded the fiscal target of $29.38 billion set by the Pharmaceuticals Export Promotion Council.

The growth was particularly impressive in March, with pharma exports valued at $3,681.51 million, representing a substantial 31% year-on-year increase from $2,805.71 million in the previous year. Drug formulations and biologicals accounted for over 75% of total exports, with a year-on-year increase of nearly 9%.

This performance is especially notable given the backdrop of geopolitical tensions and economic challenges. The United States remained the largest market for Indian pharmaceuticals, making up over one-third of total exports, with a notable 14.29% increase to $8,953.37 million in FY25. India's pharmaceutical resilience contrasts with struggles in other sectors, demonstrating the industry's strategic importance and adaptability.

The surge in pharmaceutical exports aligns with Prime Minister Modi's vision of growing the sector to a valuation of ₹10 lakh crore. Industry collaboration with academia is seen as a pathway to further enhance growth and innovation. Meanwhile, several pharmaceutical companies reported encouraging financial results, with Morepen Labs targeting Rs 5,000 crore revenue by FY30 and focusing on expanding its Active Pharmaceutical Ingredients (APIs) business.

The geopolitical silver lining for India's pharmaceutical sector is that US tariffs notably did not apply to pharmaceuticals, allowing for a smoother export process compared to other industries. This exemption highlights the strategic importance of pharmaceutical trade in bilateral relations and provides a stable channel for continued growth.

Elon Musk prepares for India visit as tech collaboration gains momentum

Elon Musk, CEO of Tesla Inc., is preparing to visit India later this year following a telephone conversation with Prime Minister Narendra Modi. This development underscores Tesla's strategic interest in establishing a presence in one of the world's largest and fastest-growing automotive markets.

During their discussion, Musk emphasized the "immense potential" for technological collaboration in India, pointing to plans for Tesla to open its first retail stores in the country. The company has already identified several locations for these outlets and listed 27 job openings in India, focusing on supply chain roles. Two Tesla models have been homologated for the Indian market, and vehicles have recently been seen undergoing tests on local highways.

The timing of Musk's planned visit coincides with significant policy developments in India. The government is actively working on a "Scheme to Promote Manufacturing of Electric Passenger Cars in India," aimed at facilitating the establishment of electric vehicle manufacturing in the country. This initiative aligns with ongoing negotiations between India and the United States toward a trade deal targeting $500 billion in bilateral trade by 2030.

Beyond Tesla, Musk is diversifying his business efforts in India through collaborations with local companies. Starlink, his satellite internet venture, is partnering with major telecommunications firms such as Bharti Airtel and Reliance Jio to launch satellite-based broadband services across India.

On the domestic technology front, PhonePe, the prominent fintech company owned by Walmart, has converted from a private entity to a public company ahead of its anticipated Initial Public Offering (IPO). This transition was officially communicated in filings with the Registrar of Companies, with CEO Doug McMillon having announced preparations for a potential IPO on February 20, 2025. As of March 2025, PhonePe holds a dominant 48% market share in India's Unified Payments Interface (UPI) ecosystem, closely followed by Google Pay.

Cryptocurrency and mining gear caught in tariff crossfire

The cryptocurrency sector found itself unexpectedly entangled in the escalating trade tensions between the US and various Asian nations. When Trump announced new tariffs on imported mining equipment from Southeast Asia (36% for Thailand, 32% for Indonesia, and 24% for Malaysia), it triggered a frantic rush to move approximately $330 million worth of Bitcoin mining equipment to the United States before the cutoff date of midnight on April 9.

Christopher Berschel, president of Canadian freight forwarding firm Sealion Cargo, orchestrated an extensive logistical operation involving chartered aircraft, trucks, and barges to transport the equipment to American buyers. The urgency was driven by estimates of potential $80 million exposure to tariffs. Ironically, just hours before the deadline, Trump announced a 90-day pause on the tariffs, rendering the frantic rush unnecessary.

Despite this reprieve, companies incurred exorbitant costs—sometimes exceeding fourfold the usual airfreight rates and up to twenty times the typical ocean freight costs. This scenario highlights the increasing challenges and expenses faced by American businesses when adapting their global supply chains amid shifting trade policies.

In the broader cryptocurrency market, the Trump memecoin faced its own challenges. An upcoming "token unlock" will release an additional 40 million tokens, contributing to a total of 1 billion tokens anticipated within three years. This event allows early investors and insiders, previously restricted from selling, to trade their tokens freely. The token experienced extreme volatility post-launch; it initially surged in value, achieving a market cap of approximately $14 billion, but subsequently plummeted by 90% as holders rushed to liquidate profits.

Meanwhile, Robert Kiyosaki, the author of the influential personal finance book "Rich Dad Poor Dad," made striking predictions regarding the future values of significant investment assets. He suggested Bitcoin would reach $1 million per coin, gold would hit $30,000 per ounce, and silver would climb to $3,000 per coin by 2035. These bold forecasts came amid his concerns over the US economy's unstable condition, including increasing credit card debt, rising national debt, escalating unemployment, and declining retirement account values.

quick snippets

• Zomato and Blinkit parent Eternal approved capping foreign ownership at 49.5%, enabling Blinkit to stock inventory domestically instead of merely acting as a marketplace, potentially improving margins in various product categories.

• Reliance Industries will consider raising funds through non-convertible debentures at its board meeting on April 25, alongside reviewing financial results and recommending dividends.

• AMG Metals partnered with Rio Tinto to develop a low-carbon aluminum project in India, including a primary aluminum smelter with production capacity up to one million tonnes per annum, leveraging renewable energy from Greenko.

• Just Dial reported a 61% growth in net profit to Rs 584.2 crore for FY25, with revenue rising 9.5% to Rs 1,141.9 crore, driven by strategic merchant acquisition and enhanced market penetration.

• India's foreign exchange reserves jumped $1.56 billion to $677.83 billion as of April 11, 2025, marking the sixth consecutive week of increases, with gold reserves rising by $638 million to nearly $80 billion.

• Financial data contradicted rumors of GST on UPI transactions over Rs 2,000, with the Finance Ministry clarifying that no such proposal is under consideration. UPI transaction values have escalated from Rs 21.3 lakh crore in fiscal year 2020 to an anticipated Rs 260.56 lakh crore by March 2025.

• Tamil Nadu's power capacity increased by 3,000 MW, raising total capacity to 42,772 MW, with significant contributions from renewable energy installations totaling 25,290.67 MW, including 11,739.91 MW from wind and 10,153.58 MW from solar.

• SEBI and MCA plan to conduct investor camps across India to expedite transfer of unclaimed shares and dividends to rightful owners, potentially reducing the age limit for priority claims from 75 to 70 years initially, with future adjustments to benefit seniors over 60.

• Andhra Pradesh is investing Rs 11,000 crore in transmission projects, with 18 projects worth Rs 1,095 crore already commissioned and 55 more valued at Rs 4,965 crore underway, aiming to ensure 24/7 power supply.

• Australia is in discussions with Air India and IndiGo to introduce direct flights from India to Sydney, particularly targeting the Western Sydney International Airport scheduled to begin operations by end of 2026, which will operate 24 hours without the current restrictions.