Mukesh Ambani’s Business Faces Challenges as US Trade Risks Rise

Mukesh Ambani, Asia’s richest businessman, is facing new challenges as US trade policies could impact his business empire. If former US President Donald Trump returns to power, changes in trade regulations may create obstacles for Indian companies, particularly Reliance Industries.

Trade Tensions Between the US and India

The US has criticised India’s high tariffs, and there are concerns that any trade dispute could affect multiple industries. American companies have struggled to expand in India due to restrictive regulations. If the US pushes for policy changes, large Indian companies like Reliance, which benefit from these restrictions, could lose their advantage.

Reliance Retail and Jio Platforms at Risk

Reliance has invested $50 billion in its retail and digital businesses since 2020. These businesses contribute significantly to its $200 billion market value and are preparing for stock market listings. However, the retail division is undergoing restructuring, and analysts have reduced its valuation.

Reliance’s Jio telecom service, with 500 million users, faces competition from Elon Musk’s Starlink, which may enter India without having to bid for telecom spectrum. If Starlink offers cheaper internet, Reliance could lose premium customers, affecting its revenues. Jio’s average revenue per user has grown by 12% over the past year but remains low at just over $2 per month.

Reliance’s Retail Business and Foreign Competition

Reliance Retail benefits from rules that limit foreign companies like Walmart and Amazon from directly selling products or offering heavy discounts. However, Trump’s recent meeting with Walmart CEO Doug McMillon suggests the US may push for regulatory changes. If Walmart’s Flipkart and Amazon gain more freedom in India, Reliance Retail could face stronger competition.

Oil Business Faces Geopolitical Uncertainty

Reliance’s traditional oil and chemicals business is also under pressure. Ambani previously secured deals to buy Venezuelan crude oil despite US sanctions, but future deals may be tougher. The company has relied on cheaper Russian oil, but Trump may push India to buy more expensive American oil, which could reduce Reliance’s refining profits.

Additionally, China’s increased supply of petrochemicals is lowering global prices, making it difficult for Reliance to maintain high-profit margins.

Succession Planning and Future Investments

Reliance is currently transitioning leadership to Ambani’s children. His youngest son, Anant Ambani, leads the energy division and is responsible for the company’s $9 billion investment in renewable energy. However, its battery factory has missed a key performance goal, and the Indian government is demanding compensation due to missed targets under an incentive program.

Conclusion

Reliance faces hurdles from US trade policies, foreign competition, and internal challenges. 

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