New Delhi: The Finance Ministry has said that the fresh round of American tariffs on Indian exports will not cause immediate damage, though officials admit that the aftershocks could still unsettle the economy.
In its economic review, the Department of Economic Affairs said the doubling of tariffs by US President Donald Trump (taking duties on some items to 50 per cent) has not yet produced the feared slump in exports. The bigger worry, it said, lies in the knock-on effects: tighter supply chains, higher inflation, and possible erosion of India’s edge in global trade.
The tariffs, which formally came into force on Wednesday, mark a sharp turn in relations between two countries that had branded each other strategic partners for much of the past two decades. Still, officials argue India is not sitting idle. Negotiations with Washington are continuing, and New Delhi is pushing a wider diversification strategy.
A trade pact with the United Kingdom is already signed, several smaller agreements have been struck with European nations, and talks with the European Union and New Zealand are underway. These deals, however, will take time to yield benefits and may not fully make up for any prolonged shortfall in sales to the United States.
Government sources, while urging caution, dismissed the idea of panic. They pointed out that India’s export basket is broad, reducing the risk of overexposure to any single market. One senior official described the tariff dispute as “a temporary phase in a long-term relationship”, emphasising that channels of dialogue with Washington remain open.
The review also flagged encouraging signals elsewhere: an upgrade in India’s sovereign credit rating by S&P, ongoing tax reforms and attempts to simplify regulations. These steps, it argued, could lower borrowing costs and draw foreign capital, offering a cushion against the tariff shock.
For now, the government is trying to project calm. Yet it admits that the risk of rising prices, slower logistics and reduced competitiveness cannot be brushed aside.