US tariffs: Global trade tensions hit IPO outlook for Indian tech startups

Rising concerns over a potential US recession and renewed trade tensions, fuelled by US President Donald Trump’s tariff proposals, are prompting several Indian technology startups to reassess their initial public offering (IPO) plans. A wave of market uncertainty has tempered investor appetite, leading many firms to consider delaying their listings, according to industry sources and analysts.

 

"US tariffs have a wide-reaching impact on geopolitical relations, trade flows, and businesses. Companies face tremendous uncertainty and rapid change on a global scale. Increased volatility spells bad weather in the short term for IPOs,” said Veenit Surana, partner, financial accounting advisory services (FAAS), EY India. “As companies emerge from this uncertainty and assess the impact on their current and future financial projections, the IPO window will open again post-Diwali for well-equipped companies."

 

This uncertainty comes at a time when more than 30 startups—together valued at around $100 billion—are eyeing public debuts by 2027, signalling long-term optimism for India’s equity markets, according to a report by the Rainmaker Group, an investment bank. Among those preparing to go public are Walmart-owned Flipkart, fintech leader PhonePe, SoftBank-backed Lenskart, Razorpay, Zetwerk, Meesho, and electric vehicle maker Ather Energy.

 

“This market is brutal if you’re aiming for an IPO in the next couple of months,” said an executive at a tech company preparing to go public, speaking on condition of anonymity. “The turmoil doesn’t just hit profitability for companies planning listings—it also shakes investor confidence.”

 

The sharp market sell-off, driven by growing US recession fears, has cast uncertainty over the upcoming IPOs of Ather Energy and LG Electronics India. Both companies, originally set to debut later this month, may consider postponements, sources said, as market sentiment sours amid escalating global trade tensions. Ather is reportedly weighing plans to reduce its IPO size by at least $50 million, scaling back from an earlier target of about $400 million, according to Bloomberg.

 

Anil Joshi, founder and managing partner at Unicorn India Ventures and a member of the VC Council at the Indian Venture and Alternate Capital Association (IVCA), said the current tariff issues have clearly affected listed companies and will similarly impact firms planning IPOs, as enterprise valuations across the board have taken a hit.

 

“Thereby, it will impact the startups going IPO. There is a risk of investor sentiment on IPO price for sure,” said Joshi.

 

Industry experts said businesses that rely on the domestic market may not be significantly affected by the tariff issue. However, they noted it may be wise to wait, given the current market sentiment, which could impact the subscription price.

 

Pearl Agarwal, founder and managing partner at venture capital firm Eximius Ventures, said tariffs have significantly affected foreign capital inflows into India, particularly in the later stages and public markets.

 

“A lack of liquidity at the IPO stage could dampen demand for tech companies, especially those heavily reliant on foreign revenues or supply chains,” said Agarwal.

 

While consumer tech companies targeting Indian users may not be directly impacted, experts said manufacturing, B2B SaaS, and globally service-driven companies will have to navigate turbulent waters.

 

“Consumer companies in fashion, beauty, and wellness that depend on Chinese supply chains for procurement will also need to develop Indian alternatives—potentially increasing costs and reducing valuations,” said Agarwal. “However, since tariff decisions are yet to be finalised, the true impact will only become clear once all countries announce their final tariff structures.”

 

But investor sentiment is presently low, and this is reflected in stock market performance, according to experts. Investors are reacting to the impact on business potential and, therefore, on earnings.

 

“This will continue till the time there is clarity on the matter. Hence, the IPO listings may get deferred as the price realisation may get impacted,” said Joshi of Unicorn India Ventures.

 

Meanwhile, China has hit back in the escalating trade war with the US, raising tariffs on American goods from 84 per cent to a steep 125 per cent. The move follows US President Donald Trump’s decision to impose a 145 per cent tariff on select Chinese imports, further straining relations between the world’s two largest economies.

 

India’s startup ecosystem is experiencing a surge in IPOs, marking a shift from the earlier practice of companies preferring to list in Singapore or the US.

 

New-age companies—typically driven by technology and focused on digital services—are expected to play a crucial role in India’s upcoming IPO boom. There are about 30 such listed companies with a combined market capitalisation (market cap) of more than $110 billion, of which the top 15 account for $80 billion, according to Redseer Strategy Consultants.

 

The market cap of these new-age companies is expected to reach $1 trillion by 2030, driven by IPO-ready businesses, a robust regulatory environment, and domestic investments, according to the marketing consultancy firm.

 

·         More than 30 technology startups, collectively valued at $100 billion, are poised to go public by 2027.

 

·         Some of them include Flipkart, PhonePe, Lenskart, Razorpay, Zetwerk, Meesho, and Ather Energy.

 

·         However, a wave of market uncertainty has tempered investor appetite.

 

·         This may make some tech firms consider delaying their listings in the short term.

 

·         IPO window expected to open again post-Diwali for well-equipped companies.