Following the news that the US will impose 25% tariffs on all Indian imports starting from 1 August 2025.
Ramnivas Mundada, Director of Economic Research and Companies at GlobalData, a leading data and analytics company, offers his view:
“These significant tariffs, coupled with penalties linked to India's dealings with Russian energy and military supplies, pose serious challenges for key export sectors, including electronics, pharmaceuticals, automobiles, and textiles. Compounding these issues, six Indian companies have recently been sanctioned by the US Department of State for engaging in petroleum trade with Iran. Against this backdrop, GlobalData has revised its 2025 economic growth forecast for India from 6.6% in March 2025 to 6.5% in July 2025.
“The Indian stock market initially reacted sharply to the trade tariff announcement, with the Nifty50 falling below 24,700—down 189 points—and the BSE Sensex dropping 600 points in early trading on July 31, 2025. The MSCI India Index also recorded its weakest monthly performance since February, reflecting heightened investor concerns around trade tensions and export sector exposure. However, market sentiment has since steadied, suggesting that investors have largely absorbed the initial shock and are now recalibrating expectations considering the evolving trade landscape.
“The rupee also weakened significantly in response to the tariff announcement, experiencing its largest one-day decline since May 2025 and falling past the 87 level against the US dollar on 30 July 2025.
“According to ITC Trade Map data, exports of electrical machinery and equipment, gems and jewelry, pharmaceuticals, machinery and mechanical appliances, and mineral fuels collectively represented over 51% of India's exports to the US in 2024. Additionally, the possibility of manufacturing operations relocating to other Asian countries with lower tariffs poses a significant threat to India's standing as a manufacturing hub.
“In conclusion, the ongoing stalemate in trade negotiations between the US and India underscores the complexities of their relationship. With the US justifying tariffs due to India's high trade barriers and procurement of Russian goods, both nations face significant challenges ahead. As a US delegation prepares to visit India on 25 August 2025, for the sixth round of talks, achieving a mutually beneficial agreement is crucial for fostering stronger ties and ensuring the resilience of the Indian economy in an evolving global landscape.”
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