US President Donald Trump has imposed 25 percent of additional tariffs on imports from India and economists feel that this step may take 0.4 percent of India’s GDP growth in FY 26.
Bank of Baroda economics expert, Sonal Badhan, told ANI, “We initially put 25–26 percent tariffs on imports from India, about 0.2 percent influence (on GDP growth).
He said that on the basis of the final trade agreement, the total effect of these tariffs on GDP growth could be between 0.2–0.4 percent. The possibility of being affected includes garments, precious stones, electronics, pharma, auto parts and MSMEs.
He said, “Not interacting at low rates seems to be a negative risk to forecast our development of 6.4–6.6 percent,” he said.
The move has also given rise to serious concerns among Indian exporters and business experts. Fresh tariffs have taken up to 50 percent of the total US import duty on Indian goods, causing Indian exports to the US market quite expensive.
The step, declared through an executive order on Wednesday (US Time), continues to import oil from Russia in response to India.
Trump’s executive order said, “I think the Government of India is currently importing the oil of the Russian Federation directly or indirectly.
Accordingly, and in accordance with the applied law, India’s articles imported into the Customs sector of the United States will be subject to the Valorem rate in addition to the duty of 25 percent.
Ajay Bagga, a banking and market expert, told ANI that the standing tariff is a major setback. He said, “India has now become a hit with 50 percent tariff, but clearly, once it has crossed 25 percent, it did not make any difference. It could be 1,000 percent or 5,000 percent, no business here is possible,” he said.
Bagga reported that Christmas orders prepared and shipments are already ready, the move barely hit the exporters. “If the USD 1 billion worth of textile exports are stopped, it directly affects about 100,000 workers.”
Agneshwar Sen, the leader of the trade policy in EY India, called the additional tariff unnecessary.
He said, “Political differences are best solved through mutual dialogue and established forums, not through such measures. I hope the Indian government is looking for a balanced resolution with the US,” he said.
The Federation of Indian Export Organization (FIEO) also expressed concern.
FIO President, SC Ralan said, “About 55 percent of our shipment in the US market is directly affected. 50 percent tariffs cause 30-35 percent competitive loss to Indian exporters.”
He said that many buyers are now giving export orders due to the cost of high land.
He said, “For MSME, it is not feasible to absorb this cost. It can force many to lose long -run customers,” he said.
While the Executive Order imposes tariffs on most Indian imports, some items are excluded under the Annex II of the Executive Order 14257. These include some mineral substances, metallurities ore, fuel, industrial chemicals and pharmaceutical pioneers.
Meanwhile, India has clarified that it will continue to buy oil based on its own strategic interests.
Trade tension between the two countries now appears to be increasing, and the coming weeks can be important as the two sides interact on potential relief. (AI)
