Chemical Stocks to Watch: There was a wait for a trade deal between India and America for a long time, and now its countdown has started. Under the recent interim trade agreement between the two countries, the US has agreed to reduce the tariff on the export of chemicals from India from 50% to 18%. The trade deal between India and America will not only benefit Indian companies from lower duty but will also give them an edge over Chinese competitors, whose American exports attract double the duty. However, it is important to note that the new tariff rate of 18% will be applicable only once the agreement is officially signed. So far both the countries have issued only a joint statement, but the agreement has not been signed.
Which chemical stocks will keep an eye on?
Due to the trade deal between India and America, companies like Aarti Industries, Naveen Fluorine International, Gujarat Fluorochemicals, Lakshmi Organic Industries, Vinati Organics and SRF Limited may be affected. For example, about 40% of Aarti Industries’ exports to the US attract duty at a high rate of 50%, which, according to the company’s CEO Suyog Kotecha, eats up a large portion of its profits. Due to the trade deal between India and America, domestic brokerage firm Axis Direct estimates that there could be a recovery of 20-25% in the export volume of specialty chemicals. Currently this accounts for about one-fifth of the country’s $600 crore annual chemical export.
India-US Trade Deal: Special points
The draft of the much awaited trade deal between India and America has finally come out. However, the trade agreement has not been signed yet and will come into effect only after it is signed. Under this deal, America has agreed to reduce the tariff from 50% to 18%. The agreement is expected to be formally signed by mid-March, after which the new rates will come into effect. Under this deal, India aims to import energy products, aircraft and its parts, precious metals, technology products and coking coal worth $50 thousand crore from America in five years. At the same time, India has completely protected sensitive agri and dairy products like maize, wheat, rice, soya, poultry, milk, cheese, ethanol (fuel), tobacco, some vegetables and meat. An important thing about this deal is that if either country changes the tariff, the other country will also have the right to change its commitments.
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