The proposed US tariffs on Indian goods will have a “manageable” impact on the country’s economy, affecting just 0.19 per cent of India’s GDP, according to industry leaders.
The tariffs are expected to affect exports to the US worth approximately $8.1 billion, said industry think tank PHDCCI in a report. “Our analysis estimates an impact of only 1.87 per cent on India’s global merchandise exports and a negligible 0.19 per cent on India’s GDP due to US tariffs,” it noted.
The United States’ 25 per cent tariff on Indian imports is set to take effect on August 7. According to PHDCCI, the sectors likely to be most affected include engineering goods ($1.8 billion), electronic goods ($1.4 billion), pharmaceuticals ($986 million), gems and jewellery ($932 million), and ready-made garments ($500 million).
To mitigate the impact, the chamber has proposed a four-pronged strategy. It recommends deeper market penetration in the US through bundled pricing models negotiated with major American retailers.
“Leverage diaspora networks, secure long-term offtake agreements to stabilise demand, develop premium export variants, and co-innovate with US buyers on custom specifications,” the report added.
The chamber also advised redirecting exports to the EU, Canada, and Latin America while leveraging recently concluded free trade agreements. Meanwhile, US President Donald Trump has hinted at an additional, unspecified penalty on Indian imports due to the country’s ongoing oil purchases from Russia.
Despite these headwinds, the study underlined that India remains the fastest-growing major economy in the world, with the IMF’s July 2025 forecast projecting a GDP growth rate of 6.4 per cent.
“The tariff challenge accelerates India’s need for export sophistication and geographic diversification. Our strategy framework provides a roadmap for converting this disruption into an opportunity for long-term competitiveness enhancement,” said Hemant Jain, President, PHDCCI.
Ranjeet Mehta, CEO and SG, PHDCCI, added, “While the 25 per cent US tariff presents challenges, India’s robust domestic demand and diversified economy provide resilience. Our analysis shows the impact, though significant in absolute terms, remains manageable at the macro level. This presents an opportunity for Indian businesses to accelerate market diversification and value addition strategies.”
— IANS
