NEW DELHI– The U.S. decision to double tariffs on Indian goods from 25 percent to 50 percent starting August 27 is set to affect Indian exporters unevenly, but analysts say the country’s large domestic market will help absorb much of the shock.
According to a report by S&P Global Ratings, the fallout will not be uniform across sectors. Labor-intensive industries such as textiles and gems and jewelry are expected to feel only moderate pressure, while pharmaceuticals, smartphones, and steel remain relatively shielded due to exemptions, existing tariff levels, and steady domestic demand. By contrast, capital goods, chemicals, automobiles, and food and beverage exports are likely to face the most significant headwinds.
The new tariff, which the U.S. says is in response to India’s continued oil trade with Russia, will be the highest in the region and could affect 50 to 60 percent of India’s total exports to the American market.
Still, India’s broader economy is expected to remain resilient. A Morgan Stanley report recently identified India as the “best placed country in Asia” to weather global trade disruptions, citing its low goods exports-to-GDP ratio. Fitch Ratings also projected that India’s economy will continue to grow at 6.5 percent in FY26, supported by strong domestic consumption that reduces dependence on external demand.
External Affairs Minister S. Jaishankar, speaking during his visit to Moscow, defended India’s energy policy, noting that India is neither the largest buyer of Russian crude nor unique in its trade with Moscow. “We are not the biggest purchasers of Russian oil — that is China. We are not the biggest purchasers of LNG — that is the European Union. We are not the country that has seen the biggest trade surge with Russia since 2022,” he said.
Jaishankar emphasized that India has also increased oil imports from the United States and continues to act in line with national interest and global market stability.
Despite the near-term challenges for some export sectors, analysts suggest India’s economic fundamentals, driven by strong domestic demand and diversified energy imports, will provide a buffer against Washington’s tariff move. (Source: IANS)
