ECONOMIC FALLOUT FOR INDIA
Analysts say the new tariffs, which could push Indian export duties to as high as 50 per cent, will impact sectors such as textiles, footwear, gems and jewellery. India exported nearly US$87 billion worth of goods to the US in 2024.
“This is a severe setback. Nearly 55 per cent of our shipments to the US will be affected,” said S.C. Ralhan, president of the Federation of Indian Export Organisations.
Indian exporters now face a 30 to 35 per cent disadvantage compared with competitors in Vietnam, Bangladesh and Japan, economists warn.
The move follows five rounds of stalled trade talks, derailed by disagreements over US access to Indian agriculture and dairy markets, and New Delhi’s refusal to cut Russian oil imports, which hit a record US$52 billion last year.
The timing of the tariffs, effective 21 days after Aug 7, suggests Washington may still be open to negotiation, according to Indian officials.
“We still have a window,” a senior official said, adding that phased cuts in Russian oil imports could be part of a compromise.
NO RETALIATION PLANNED
India has not announced any retaliatory tariffs or plans for a high-level visit to Washington. Instead, the government is considering domestic relief for exporters, including loan guarantees and interest subsidies.
A sharp drop in shipments to the US could drag India’s GDP growth below 6 per cent this year, down from the central bank’s 6.5 per cent forecast, said Sakshi Gupta of HDFC Bank.
Markets responded with caution, the Indian rupee weakened in offshore forwards trade, and equity futures fell modestly.
“Unless there’s swift clarity or a breakthrough, a near-term knee-jerk market reaction is inevitable,” said Mayuresh Joshi, head of equity research at Willian O’ Neil.
