US Tariffs Threaten Indian IT Sector's Recovery

Even as the Indian IT sector anticipated a boost from improved trade clarity by August, the imposition of 25% tariffs by the US poses a significant threat. This move could dampen sentiment and curb discretionary spending, which was only just beginning to recover.

The sector's recent lackluster performance has been blamed on weak macroeconomic conditions, cautious client sentiment, and delayed decision-making. Nitin Bhatt, technology sector leader at EY India, commented, "While the Indian IT services sector isn't directly impacted by the new US tariffs, the indirect effects could be considerable. Increased input costs might lead US companies to reduce discretionary tech spending. Additionally, concerns over workforce mobility and changing digital taxation policies could alter the pricing of cross-border services.

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