US Tariff - Refunds & Exporter Pricing

With US Supreme court striking down the penalty tariffs levied using International Emergency Economic Powers Act (IEEPA) of 1977 the tax collected using these tariffs over the past 6 months which total approximately $133.5B+ is now legally void.

Companies (Importers in USA) should apply for refund of these penalty tariffs which is not easy as there will still be new court cases, interpretations and multiple regulations.  Timeline may be some months/years.

Question is will the exporters who reduced prices in lieu of tariffs will get some portion of this refund from their customers to compensate for their sacrifice?  A big question - need to wait and watch.  Exporters please watch out and try to re-coup some of your sacrifices 

No Tariff Advantage - India exports to US

Penalty Tariff Goes

With the US Supreme court overturning tariffs imposed using authority under International Emergency Economic Powers Act (IEEPA) of 1977 the penalty tariffs imposed on all countries using IEEPA stand cancelled immediately.   Which means the 18% reduced penalty tariff for India also stands cancelled.  

New Temporary Tariff comes  

Immediately after the Supreme court order Trump introduced a 10% tariff on all countries under Section 122 of the Trade Act 1974, which lets the president levy temporary import surcharges (max for 150 days), which means this additional 10% tariff has a short shelf life of maximum 5 months, by which time Trump has to decide on how they will charge additional tariffs to some countries

What it means for India

With immediate effect India's product will have 10% tariff, will it be an advantage to India - Answer is NO.  All countries across the world will have additional 10% tariff meaning there is no advantage for India at this moment.  So why US India trade agreement?  The US India trade agreement will help India to limit additional tariffs to maximum 18% when Trump administration moves with new laws to increase tariffs for all countries.  For example some countries will have 25% tariff whereas India will be restricted to 18% or lower.  

In short advantage of tariff is removed at this moment for India, may come back later depending on what tariffs are imposed on other countries

"To" or "Not To"

Rally in Gold, Silver, Copper is staggering especially in the past 1 year considering the uncertainties in world politics & economics.  

Question raised by many : Will this rally continue and will there be staggering returns. 

Answer : With political / economical situation not clear and there are multiple challenges existing uncertainty looms large which means rally in Gold, Silver, Copper may continue into 2026 unless stability kicks in.  

Question : Will this rally be similar to what is being seen in the past 1 year

Answer : I have my doubts on the same as valuations have hit a peak and hence, returns may subdue in 2026 

Question : Should we invest in Gold, Silver, Copper

Answer : 20% of portfolio is always advisable to be in these commodities which provides good balance to one's portfolio.  Over leverage will always have consequences which will be difficult to take when it happens

Rise Again!

Last 19 years built brick by brick brand took a beating in the past few days due to serious lapse on compliance.  A brand which started small with support from investors and dedicated team members made it really big in Indian corporate scene.  In recent times, when seeing the departure screen in airports painted only with Indigo blue fascinated me as to how a brand became so dominant in a short period of time leaving competition way behind.  

Aviation is not an easy industry to be in, it is capital intensive, labour intensive, technology intensive, cost intensive and to top it all customer super sensitive.  In my experience, in a corporate world managing human resources is the most challenging part considering the fact that every single human resource is different plus the fact (we like it or not) human resources tend to have a bias to "herd mentality" for example if one passenger for whatever reason gets upset and starts to show it off at the airport counter or departure counter quickly a group is formed (impromptu) to endorse this view point and join the show off.  

Indigo succeeded and made it big (with profits) in an industry where many players went bankrupt quickly not able to survive the harsh realities of this industry.  When success keeps going well someone took the eye off the compliance ball which hit the entity on its head knocking it down needing urgent medical attention.  At this point of knock down questions are raised and deeply analysed about the way Indigo goes on with its business with everyone giving their point of view - fair enough this is good as always having a reality check opens up new thinking which is good to bring about a change (even a paradigm shift).  

I sincerely hope this knock down is temporary for Indigo since as a brand they made all the right moves and went to top purely on their merits in a reasonably short time 

Giving birth is ecstasy, making right decisions and actions to reach the pinnacle is pure joy, keep the top position for a longer period is a sense of achievement, getting into small turbulences is painful, rising back again is double ecstasy!

I hope Indigo gets to this double ecstasy mode soon.  Wishing you all success Indigo, keep flying high on your own merits.       

Compliance taken lightly

My first choice when I need to fly will now become one of the choice when I fly in future.  A reputation built over years of hard work has taken a jolt which will need another good amount of time to re-build - hope this happens soon.  

To me it seems to be a "simple" miss on Indigo side which proved too costly, they did not take the new rules notified by Government on Flight Duty Time Limitations or FDTL seriously and did not work to comply by it 100%.  Maybe they were expecting it to be relaxed or extended for further period of time, it was not to be and all chaos followed.  The below is the cost of this "miss/lapse" till now only on refunds (other losses not withstanding) 

A total of 586,705 PNRs (for period between 01 to 07 December, 2025 were cancelled and refunded, amounting to total of Rs 569.65 crores. A total of 9,55,591 PNRs (for period between 21 November to 07 December, 2025 (2359hrs)) were cancelled and refunded, amounting to total of Rs 827 crores. 4500 bags were delivered to customers out of a total of 9000 bags. Target to deliver balance bags in the next 36 hours. Today, IndiGo plans to operate 1802 flights to 137 out of 138 destinations, with 500 cancellations: Source : Ministry of civil aviation

 Lessons Learnt : 

• Compliance to rule of law is paramount 
• Being big does not mean immunity to changes in compliance
• Management to take change in laws seriously and work on it immediately 
• Cost is paramount, we need to keep it minimal.  But we need to understand "Compliance comes with a Cost" - we need to accept this.  We can optimise cost but cannot avoid/reduce it at cost of compliance

US$ feel good @ 90!!

US$ marching towards 90 to INR is providing good comfort to exporters as they try to re-coupe some of their losses due to tariff imposed.  To me this seems to be a deliberate attempt by the Government and RBI to provide impetus to exports.  

                                                            USD vs INR

                                                                    Euro vs INR

The next big question will be what will happen to inflation if currency depreciates.  This question is answered / offset by drop in oil prices & commodity prices.  Inflation is on an all time low in India thanks to drop in oil & food prices and reforms in GST 

Smart "netting" move by the Government & RBI -> Netting of currency depreciation with fiscal / monetary measures is a way of informing the world that India is a mature economy which is resilient to external shocks and pressures.  Growing internal demand coupled with internal capital mobilisation is further helping India to be immune to external pressures.  Let us keep this going folks.  

This week in stock market

 During the week sensex rose by 1.73% 

The weekend surge happened mainly due to data released on 10th November by USA on consumer price index (CPI) which was lower than expected at 7.7% in October compared to 8.2% in September.  Indian market surge followed the surge in stocks in US.  Another favourable point for the sensex is that INR strengthened against USD and now is trading @ 80.73 compared to one day earlier close of 81.68.   With core inflation moving down in USA interest rate hikes in USA will be moderated, this will lead to more FII investments moving to India which in turn will make the stock market bullish.   On domestic front all industries are expected to do will this quarter and results are expected to be good.  This is good news for the markets.

My take : Market will be bullish for the reminder of 2022.  It is good to invest in the markets in small volumes over a period of time in quality stocks & mutual funds.  There will be fluctuations in the market on certain days but overall market will provide good returns in the short to medium term.