Author: Prudent Asset India

The US has imposed a 26% reciprocal tariff on Indian goods (effective April 9, 2025) and a 34% tariff on Chinese goods under President Trump’s “Liberation Day” policy. While this presents short-term challenges, it also creates strategic openings for India.

𝐄𝐜𝐨𝐧𝐨𝐦𝐢𝐜 & 𝐒𝐞𝐜𝐭𝐨𝐫𝐚𝐥 𝐈𝐦𝐩𝐚𝐜𝐭
𝐄𝐱𝐩𝐨𝐫𝐭 𝐋𝐨𝐬𝐬𝐞𝐬: India’s exports to the US ($77.5B in FY24) could decline by $2.71B annually (-3–3.5%).
𝐆𝐃𝐏 𝐄𝐟𝐟𝐞𝐜𝐭: Growth may slow by 5–10 bps, but strong domestic consumption provides a buffer.
𝐂𝐡𝐢𝐧𝐚’𝐬 𝐁𝐢𝐠𝐠𝐞𝐫 𝐇𝐢𝐭: With $575B in US exports, China faces an estimated $195.5B loss-far exceeding India’s impact.

𝐈𝐧𝐝𝐮𝐬𝐭𝐫𝐢𝐞𝐬 𝐚𝐭 𝐑𝐢𝐬𝐤 & 𝐎𝐩𝐩𝐨𝐫𝐭𝐮𝐧𝐢𝐭𝐢𝐞𝐬
𝐓𝐞𝐱𝐭𝐢𝐥𝐞𝐬/𝐀𝐩𝐩𝐚𝐫𝐞𝐥: $9.6B exports at risk; India (26% tariff) could gain as China faces 34%.
𝐏𝐡𝐚𝐫𝐦𝐚𝐜𝐞𝐮𝐭𝐢𝐜𝐚𝐥𝐬: Price pressure, but India strengthens its lead over China.
𝐆𝐞𝐦𝐬/𝐉𝐞𝐰𝐞𝐥𝐥𝐞𝐫𝐲: 30% of exports to the US vulnerable, yet India edges out China.
𝐄𝐥𝐞𝐜𝐭𝐫𝐨𝐧𝐢𝐜𝐬: Over 50% of exports affected, but India benefits from China’s higher tariff.
𝐀𝐮𝐭𝐨𝐦𝐨𝐛𝐢𝐥𝐞𝐬 & 𝐏𝐚𝐫𝐭𝐬: India’s $2.6B export exposure is lower than China’s.
𝐀𝐠𝐫𝐢𝐜𝐮𝐥𝐭𝐮𝐫𝐞: India’s high tariffs (39–100%) could invite retaliation, but China’s losses shift US focus.

𝐓𝐮𝐫𝐧𝐢𝐧𝐠 𝐚 𝐂𝐡𝐚𝐥𝐥𝐞𝐧𝐠𝐞 𝐢𝐧𝐭𝐨 𝐚𝐧 𝐎𝐩𝐩𝐨𝐫𝐭𝐮𝐧𝐢𝐭𝐲
𝐓𝐫𝐚𝐝𝐞 𝐃𝐢𝐯𝐞𝐫𝐬𝐢𝐨𝐧: China’s $195.5B export loss leaves a gap in US markets—India can step in.
𝐂𝐨𝐦𝐩𝐞𝐭𝐢𝐭𝐢𝐯𝐞 𝐄𝐝𝐠𝐞: India’s diversified supply chains and growing trade routes (e.g., Middle East) provide an advantage.
𝐑𝐞𝐬𝐢𝐥𝐢𝐞𝐧𝐭 𝐄𝐜𝐨𝐧𝐨𝐦𝐲: Unlike China’s export-reliant model, India’s domestic-led growth mitigates risks.

𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐢𝐜 𝐍𝐞𝐱𝐭 𝐒𝐭𝐞𝐩𝐬
𝐔𝐒 𝐓𝐫𝐚𝐝𝐞 𝐓𝐚𝐥𝐤𝐬: Push for exemptions in BTA negotiations, targeting $500B trade by 2030.
𝐌𝐚𝐫𝐤𝐞𝐭 𝐃𝐢𝐯𝐞𝐫𝐬𝐢𝐟𝐢𝐜𝐚𝐭𝐢𝐨𝐧: Accelerate FTAs with the UK, Canada, and EU (potential $15B+ gains by 2030).
𝐈𝐧𝐝𝐮𝐬𝐭𝐫𝐲 𝐒𝐮𝐩𝐩𝐨𝐫𝐭: Address non-tariff barriers and leverage China’s tariff disadvantage.

𝐅𝐢𝐧𝐚𝐥 𝐓𝐚𝐤𝐞𝐚𝐰𝐚𝐲
Yes, India faces a $2.71B export hit, but China’s loss is nearly 72x bigger. This is India’s moment to step up, capture US market share, and accelerate global trade expansion. The key lies in fast-tracking negotiations and doubling down on competitive advantages.

India’s direct tax collections have shown a strong upward momentum, reflecting the country’s economic resilience and enhanced taxpayer compliance. The latest data reveals significant growth in tax collections across various categories, indicating a robust financial outlook.

Key Highlights

• Gross Direct Tax Collections: Increased by 16.15%, from ₹22,27,214 crore in FY 2023-24 to ₹25,86,947 crore in FY 2024-25.
• Net Direct Tax Collections: Grew by 13.13%, rising from ₹18,86,774 crore to ₹21,26,923 crore.
• Refunds Issued: Saw a sharp rise of 32.51%, from ₹3.47 lakh crore last year to ₹4.60 lakh crore in the current financial year.

Category-Wise Tax Growth

1. Corporate Tax: Increased by 12.54%, from ₹10,98,299 crore in FY 2023-24 to ₹12,40,308 crore in FY 2024-25.
2. Non-Corporate Tax (Including Personal Income Tax): Witnessed a strong growth of 20.47%, from ₹10,91,129 crore to ₹12,90,144 crore.
3. Securities Transaction Tax (STT): Recorded the highest jump of 56%, from ₹34,131 crore to ₹53,095 crore.

Advance Tax Collections

Advance tax payments indicate corporate and individual confidence in future earnings. The figures show a significant increase:

• Total Advance Tax: Up by 14.62%, reaching ₹10,44,700 crore from ₹9,11,482 crore.
• Corporate Advance Tax: Grew by 12.54%, from ₹6,72,592 crore to ₹7,57,000 crore.
• Non-Corporate Advance Tax: Increased by 20.47%, from ₹2,38,890 crore to ₹2,87,700 crore.

Budget vs. Revised Estimates (RE) for FY 2024-25

The government’s revenue projections have been revised based on tax collection trends:

• Total Direct Tax Target: ₹22.37 lakh crore, slightly up from ₹22.07 lakh crore in the Budget Estimates (BE).
• Income Tax Target: Revised upward to ₹12.57 lakh crore from ₹11.87 lakh crore in BE.
• Securities Transaction Tax (STT) Target: Increased significantly to ₹55,000 crore, up from ₹37,000 crore in BE.
• Corporate Tax Target: Revised lower at ₹9.80 lakh crore, compared to ₹10.20 lakh crore in BE.

Final Thoughts

The continued growth in direct tax collections highlights India’s expanding economy, improved tax compliance, and increased taxpayer participation. With strong corporate earnings and rising personal income tax contributions, the government remains on track to meet its fiscal targets. This positive trend underscores India’s financial stability and economic growth trajectory.

The Securities and Exchange Board of India (SEBI) has unveiled a regulatory framework for Specialized Investment Funds (SIF), set to take effect from April 1, 2025. Positioned between Mutual Funds (MFs) and Portfolio Management Services (PMS), SIFs aim to provide greater portfolio flexibility while ensuring regulatory oversight.

What Are Specialized Investment Funds (SIFs)?

SIFs are a newly structured investment vehicle offering high-net-worth individuals and sophisticated investors customized investment strategies with regulatory safeguards. This framework enables investors to go beyond the traditional MF space while maintaining compliance and oversight.

Key Highlights of SIFs

• Who Can Launch? SIFs can be launched by Asset Management Companies (AMCs) with 3+ years of operations and an average AUM of ₹10,000 Cr+, or experienced fund managers with a strong track record.
• Investment Strategies Available: SIFs offer a range of investment strategies, including Equity (Large Cap, Non-Large Cap, Sectoral), Debt, and Hybrid funds with long-short strategies.
• Minimum Investment Requirement: Investors must commit at least ₹10 lakh across all SIFs of an AMC, unless they are Accredited Investors who may be granted exemptions.
• Derivative Exposure: Up to 25% unhedged derivative exposure beyond hedging and rebalancing.
• Subscription & Redemption Flexibility: SIFs can offer daily subscriptions/redemptions or fixed maturity intervals, depending on the scheme’s structure.
• SIPs & STPs: Systematic Investment Plans (SIPs) and Systematic Transfer Plans (STPs) will be permitted post the minimum investment threshold, subject to AMC discretion.
• Distribution & Certification Requirement: Mutual Fund distributors can offer SIFs but must clear the NISM Series-XIII Common Derivatives Certification to qualify.

Risk Factors Associated with SIFs

While SIFs offer greater flexibility and higher potential rewards, they also come with inherent risks:

• Concentration Risk: SIFs often have focused portfolios, increasing exposure to specific sectors or assets.
• Liquidity Risk: Limited redemption frequency may restrict easy access to funds.
• Market Correction Risk: Investors have limited averaging opportunities, making it riskier during market downturns.

Regulatory & Industry Impact

The Association of Mutual Funds in India (AMFI) has been tasked with issuing necessary guidelines by March 31, 2025. Stock exchanges and clearing corporations will also align their regulations accordingly to facilitate smooth operations of SIFs.

Final Thoughts

With the launch of SIFs, SEBI is bridging the gap between Mutual Funds and PMS, providing investors with enhanced investment opportunities. While they come with higher risks, they also present an exciting alternative for those seeking customized, high-growth investment options.

With higher risks come higher potential rewards, making SIFs an ideal choice for sophisticated investors.