Add TechGraph on Google
Speaking with TechGraph, CA Prashant Thacker, Partner at Thacker and Associates, discussed how the Trump administration’s recent tariff measures on Indian goods are reshaping cross-border business dynamics and exposing Indian exporters and their global partners to new financial and compliance risks, and how the firm is helping clients navigate these disruptions through strategic restructuring, tax planning, and market diversification.
He further spoke about how Thacker and Associates is working with clients to realign operations and holding structures by integrating tax efficiency, compliance agility, and long-term risk assessment to help organizations stay resilient and adaptable in an increasingly volatile trade environment.
Read the interview in detail:
TechGraph: The recent announcement of higher tariffs on Indian goods by the Trump administration has created uncertainty in trade and policy circles. From an advisory standpoint, what are the key risks you see emerging for Indian companies and their international partners in the short term?
CA Prashant Thacker: The imposition of higher tariffs on Indian imports by Trump’s administration is poised to significantly impact India’s economy. Over the next three to six months, Indian companies and their international partners may face risks and uncertainty, affecting business operations, financial stability, and strategic positioning.
Firstly, Indian exporters are likely to experience reduced profit margins due to pricing pressures. A potential decline in sales, coupled with demands from U.S. buyers for price reductions to offset tariff costs, could strain working capital management. Secondly, supply chain disruptions are anticipated as international partners, heavily reliant on Indian manufacturing, may seek to diversify to lower-tariff regions such as Vietnam or Bangladesh. Such shifts could lead to contract renegotiations or cancellations, resulting in underutilized production capacity and further challenges to working capital in India.
To navigate these challenges, Indian companies should conduct internal assessments to evaluate the financial implications of tariff-related pricing changes and supply chain adjustments. Additionally, maintaining close engagement with U.S. trade representatives will be crucial to monitoring developments and mitigating risks effectively.
TechGraph: Several Indian sectors, including textiles, pharmaceuticals, engineering goods, and auto components, have significant exposure to the US market. Which industries do you expect to face the greatest challenges, and how can professional advisors help them mitigate the initial shock?
CA Prashant Thacker: Among Indian sectors with significant U.S. market exposure, textiles and pharmaceuticals are likely to face the most immediate challenges.
The Textile and Apparel Industry, heavily reliant on discretionary consumer spending in the U.S., is vulnerable to economic fluctuations, shifting retail demand, and increasing protectionist policies. A slowdown in U.S. consumption or changes in trade policies could rapidly reduce order volumes and compress profit margins. On the other hand, the Pharmaceutical Sector, while more resilient due to its necessity-driven demand, faces risks from regulatory pressures, pricing controls, and a growing U.S. focus on domestic manufacturing.
Professional advisors can play a critical role in helping companies mitigate these challenges. They can guide firms in diversifying export markets to reduce reliance on the U.S., ensuring compliance with evolving U.S. regulations, and supporting the restructuring of global supply chains to optimize cost structures.
TechGraph: Many Indian firms have established complex cross-border supply chains and holding structures over the years. How disruptive could these tariffs be for such arrangements, especially when it comes to compliance, tax planning, and operational restructuring?
CA Prashant Thacker: Tariffs could significantly disrupt Indian firms with intricate cross-border supply chains and holding structures. Beyond increased landed costs, the effects will span compliance, tax planning, and operational strategies.
On compliance, the companies must review trade documentation and transfer pricing to comply with Indian and U.S. regulations. Increased scrutiny of related-party transactions and supply chain flows may elevate compliance costs and administrative burdens.
Companies could explore tax planning opportunities to minimize tax incidence and streamline profit repatriation. Tariffs could disrupt these models, necessitating to review treaty-based structures, impact on tax credits, and prompt reassessment of intercompany pricing policies.
In short, while larger companies could absorb the financial impact through strategic restructuring, the smaller companies with limited resources could face significant disruptions. The primary challenge lies in balancing regulatory compliance with cost optimization while preserving competitiveness in the U.S. market.
TechGraph: Trade policies between India and the US have seen frequent shifts and unpredictability. What steps can companies take now to stay prepared for sudden changes, while keeping their long-term strategies aligned with global markets?
CA Prashant Thacker: Given the unpredictability in India–US trade policies, companies should build resilience through diversified supply chains and markets, while stress-testing for different policy scenarios.
At the same time, strengthening compliance agility and investing in technology and product competitiveness ensures that long-term strategies remain aligned with global markets, rather than being overly dependent on tariff regimes.
TechGraph: Could these tariffs push businesses to rethink their export strategies or even overhaul their corporate structures, and what hurdles might they face while making such changes from a compliance and tax standpoint?
CA Prashant Thacker: Tariffs are likely to push firms to rethink export strategies and, in some cases, even restructure supply chains or holding models. But such changes are complex – companies must navigate regulatory approvals, compliance under India FEMA regulations, transfer pricing and OECD BEPS rules, treaty issues, and overall compliance costs – so any restructuring has to be carefully phased and well-documented.
TechGraph: Thacker and Associates work closely on cross-border deals and advisory. How are you seeing these tariff developments influence deal valuations, investor sentiment, and the structuring of ongoing or upcoming M&A transactions?
CA Prashant Thacker: Proposed tariffs are changing business dynamics, reshaping M&A, driving conservative valuations in export sectors due to margin and supply chain risks, often with discounts or earn-outs.
Investors remain optimistic about India but prioritize resilient, diversified targets. Deal structures now favor flexible terms like deferred payments and policy-linked covenants, with some companies adjusting holding structures to reduce tariff exposure, making policy resilience key in cross-border M&A valuations and design.
TechGraph: In times of global trade turbulence, guidance from advisory firms becomes even more critical. What role do you see Thacker and Associates playing in helping businesses navigate this phase, and what should companies prioritize to remain resilient and future-ready?
CA Prashant Thacker: Professional advisors can guide the companies through immediate challenges by assessing tariff impacts, restructuring supply chains and holding structures, and ensuring compliance with cross-jurisdictional tax and regulatory requirements. On the other hand, the businesses should prioritize agility, avoid over-reliance on single markets or structures, invest in robust compliance and tax strategies, and focus on sustained competitiveness over short-term tariff fluctuations.