New Delhi, Feb. 14 -- India is facing potential trade headwinds as the US President Donald Trump is considering imposing reciprocal tariffs, a move that could impact key sectors of the Indian economy. However, Morgan Stanley believes while the direct impact of tariff hikes will likely be manageable, the indirect consequences, such as uncertainty affecting business confidence, are more concerning.

The US is a crucial trade partner for India, accounting for 17.7% of its goods exports. India currently maintains a trade surplus of $45.7 billion with the US, though it remains lower than that of other Asian economies like China and Vietnam. However, India's higher tariff rates - averaging 8.5% compared to the US's 3% - make it vulnerable to re...