How Will US Tariffs Affect India's GDP?
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Synopsis
In a recent analysis, industry leaders predict that the proposed US tariffs will only affect 0.19% of India's GDP, suggesting a manageable economic impact. This raises questions about the resilience of India's economy and the potential for market diversification.
Key Takeaways
- US tariffs projected to affect only 0.19% of India's GDP.
- Impact on exports estimated at $8.1 billion.
- Significant impact on various sectors including engineering and electronics.
- Need for strategic market diversification and innovation.
- India remains the fastest-growing major economy.
New Delhi, Aug 6 (NationPress) The anticipated US tariffs on India are projected to have a manageable impact on the nation's economy, influencing merely 0.19% of the GDP, according to industry experts on Wednesday.
The tariffs are expected to impact exports to the US estimated at around $8.1 billion, as noted by the industry think tank PHDCCI in a recent report. “Our findings indicate an effect of just 1.87% on India's overall merchandise exports and a minimal 0.19% on GDP stemming from US tariffs,” they stated.
The 25% tariff imposed by the United States on Indian imports is scheduled to be implemented on August 7. PHDCCI forecasts that this will affect the import of various goods, including engineering products ($1.8 billion), electronic items ($1.4 billion), pharmaceuticals ($986 million), gems and jewelry ($932 million), and ready-made garments ($500 million).
The industry body has proposed a four-pronged approach to mitigate the tariff effects. They recommend entering the US markets through bundled pricing agreements with key US retailers.
“Utilize diaspora networks, secure long-term offtake agreements to stabilize demand, create premium export versions, and co-develop with US buyers on tailored specifications,” the report suggested.
Additionally, the industry chamber advised redirecting exports towards the EU, Canada, and Latin America while taking advantage of newly established FTAs. US President Donald Trump has also hinted at further penalties on Indian imports due to the nation’s oil purchases from Russia.
The report emphasized that India remains the fastest-growing major economy globally, with a projected 6.4% GDP growth according to the IMF's forecast for July 2025.
“The tariff challenge accelerates India's necessity for export sophistication and geographic diversification. Our strategic framework offers a pathway to transform this disruption into a chance for long-term competitiveness improvement,” stated Hemant Jain, President of PHDCCI.
Ranjeet Mehta, CEO and Secretary General of PHDCCI remarked, “While the 25% US tariff poses challenges, India's strong domestic demand and diversified economy provide resilience. Our analysis indicates that the impact, although considerable in absolute terms, remains manageable at the macro level. This is an opportunity for Indian companies to enhance market diversification and value addition strategies.”
Point of View
I believe that while US tariffs present challenges, they also offer an opportunity for India to innovate and diversify its export strategies. The nation's resilience and adaptability will be key in overcoming these hurdles and achieving sustained growth.
NationPress
04/10/2025
Frequently Asked Questions
What percentage of India's GDP is affected by US tariffs?
The proposed US tariffs are expected to affect only 0.19% of India's GDP.
How much will the tariffs impact Indian exports to the US?
The tariffs are projected to impact exports to the US worth approximately $8.1 billion.
What sectors will be most affected by these tariffs?
The sectors include engineering goods, electronics, pharmaceuticals, gems and jewelry, and ready-made garments.
What strategies are suggested to mitigate the impact of tariffs?
Strategies include entering US markets through bundled pricing, leveraging diaspora networks, and redirecting exports to other regions.
What is the current growth rate of India's GDP?
India is projected to have a 6.4% GDP growth rate according to the IMF's July 2025 forecast.
