India-US interim trade deal: Big gain for chemical stocks

India's latest interim trade agreement with the US cuts the tariff on Indian chemical exports from 50% to 18%. Indian companies gain from both lower duties and an added advantage over Chinese competitors who face twice as much duty on their products shipped to the US.

Emerging Market	US Tariff
South Africa	30%
Thailand	19%
Philippines	19%
Malaysia	19%
Mexico	25%
China	47.5%
South Korea	25%
Brazil	50%
Indonesia	19%
India	18%

However, it's important to note that the new tariff of 18% will be applicable only after the pact is signed officially. So far, the two countries have issued a joint statement, but the agreement has not been signed.

Some of the stocks to watch out will be Aarti Industries, Navin Fluorine International, Gujarat Fluorochemicals, Laxmi Organic Industries, Vinati Organics, and SRF Ltd.

For instance, about 40% of Aarti Industries' exports to the US were taxed at the highest rate i.e. 50%, shaving off a significant portion of the profits, CEO Suyog Kotecha shared last week.

Axis Direct, a Mumbai-based broking firm,  expects a 20–25% recovery in export volumes of specialty chemicals from India to the US, which currently accounts for a fifth of India's $6 billion annual chemical exports.

Read more: India-US interim trade agreement: Top highlights