India is bracing for economic fallout as escalating U.S. tariffs threaten key export sectors and weigh on growth prospects.
What’s at Stake
- The U.S. has imposed hefty new tariffs on Indian goods—25% reciprocal tariffs from August 1, followed by an additional 25% “penalty” for India’s continued import of Russian oil—pushing the total tax burden to 50%.The Global StatisticsReutersWikipedia
- These measures impact an estimated $48 billion worth of Indian exports, spanning sectors like auto parts, pharmaceuticals, pearls, and machinery.The Economic TimesWikipediaThe Times of India
Economic Impact and Growth Challenges
- India’s Finance Ministry warns that these tariffs may shave off up to 40 basis points from GDP growth in 2025–26, complicating efforts to sustain a post-pandemic rebound.Reuters
- The Global Trade Research Initiative (GTRI) estimates potential export losses of up to $50 billion if current tariff levels persist.The Times of India
- Banking leaders like Uday Kotak are urging the government to cushion the blow with fiscal support—through liquidity measures, infrastructure investment, and incentives to boost domestic manufacturing.Financial Times
Negotiations Hit Snags
- Despite multiple rounds of trade talks, key issues remain unresolved—especially concerning U.S. demands for market access to India’s agriculture, dairy, and automobile sectors.U.S. News MoneyThe Financial ExpressThe Economic Times
- The U.S. has even canceled its latest trade mission scheduled for late August, further stalling momentum toward a bilateral trade pact.ReutersThe Times of India
- Nonetheless, India’s Commerce Secretary reaffirms commitment to finalize a Bilateral Trade Agreement (BTA) targeting $500 billion in trade by September–October 2025.Indiatimes