Uncertainties around tariffs may affect capex decisions this fiscal: Crisil

Ratings agency Crisil on Wednesday said the uncertainties around the US tariffs could pose a new challenge to capital expenditure decisions in the current financial year, news agency PTI reported. This comes after the additional 25 per cent tariffs imposed by US President Donald Trump came into effect today.

 

The ratings agency added that the Centre has been driving investments so far, with the private corporate capital expenditure remaining muted. Despite the healthy corporate sheets supporting fresh investments, the imposition of the tariffs is likely to hit sentiments, Crisil said.

 

India has been slapped with a total of 50 per cent tariff, the highest among all countries. The additional tariffs were imposed for India's continued purchase of Russian oil, especially at a time when Washington has been trying to broker a peace deal between Russia and Ukraine.

 

 

Challenges for India's private sector 

The ratings agency highlighted the two challenges that are holding back the 'animal spirits' of the private sector, which include:

 

• Rising geopolitical tensions causing disruptions in the global supply chain and
• Ongoing domestic inefficiencies, like high power and land costs

 

FTAs to boost investor confidence

 

The ratings agency also added that during these uncertain times, only free trade agreements (FTAs) can boost investor confidence by lowering the tariff barriers and creating predictable trade policies.

 

It further said that opportunities will arise from new trade agreements, including the FTA with the United Kingdom, along with the capacity of corporate houses to make fresh investments. 

Trump slaps the highest tariffs on India

 

On April 2, Trump imposed 'reciprocal' tariffs on India and other countries. The tariffs were paused a week later for 90 days, and negotiations began, with Washington meeting officials of different countries, trying to secure a trade deal before the tariffs came into effect. 

 

While Trump and members of his administration, on several occasions, claimed that a deal with India was expected soon, negotiations stalled between the two sides, with the US President announcing a 25 per cent tariff rate on India on July 30. Days later, India was slapped with another 25 per cent tariffs for purchasing Russian crude oil, a move which New Delhi decried as "unfair, unjustified, and unreasonable".

 

Trump admin accuses India of profiteering from Russian oil sale

 

US Treasury Secretary Scott Bessent has accused India of profiteering by reselling Russian oil. A similar claim was made by Trump adviser Peter Navarro, who called India a "maharaj" of tariffs, accusing New Delhi of acting as a 'laundromat' for the Kremlin. In an opinion piece for the Financial Times, Navarro explained how the India-Russia oil mathematics work.