The US has announced an additional 25% tariff on imported goods from India. Meanwhile, according to Reuters, an internal report by the Government of India warns that this decision may affect India’s export of about $ 64 billion to the US.
American President Donald Trump said that this step is being taken by India to purchase oil from Russia. India has to face the most tariffs in Asian countries by the US.
According to Reuters report, this step is also challenging for India, as this matter can cause tension in the relations between the US and India. A report by the Economic Times reported that according to sources, if the 10% penalty proposed by Trump applies, the total tariff will be 35%, which can weaken India’s competitive capacity. However, now Trump has increased the tariff to 50 percent, due to which the loss can be even more estimated.
Will India’s economy be affected?
The ET report stated that India’s economy is about 4 trillion dollars, in which the share of exports is limited. Despite this, according to the report, this tariff can have a direct impact on GDP up to about 40 basis points. Although the Reserve Bank of India (RBI) has still maintained its GDP growth estimate at 6.5%, this tariff policy can emerge as a new economic challenge for India.
How much will India’s exports be affected?
In 2024, India exported goods worth about $ 81 billion to the US. This figure is about 18% of India’s total exports and 2% of GDP. Overall, India exported a global of $ 443 billion in 2024.
Sources giving information to Reuters say that India’s high-value products, such as textiles and medicines, will now get in strict competition from low-tariff countries, leading to a decline in their prices and a possible export deficit.