India's GDP Growth Under Threat from US Tariffs

India's GDP growth could plummet below 6.2% in 2025-26 if the 25% tariff imposed by the US remains in effect beyond September, warns S&P Global Market Intelligence. This projection marks a decline from the previously estimated 6.5% for FY25, highlighting the potential economic fallout from ongoing trade tensions.

Agricultural and Dairy Sectors: A Sticking Point

India's refusal to grant market access to US agriculture and dairy products is a major hurdle in bilateral trade negotiations. The political sensitivity surrounding farmers, a key electoral group, underpins New Delhi's resistance to opening these sectors.

Competitive Disadvantage in Key Export Sectors

The report also raises concerns over India's exposure to Section 232 tariffs on exports like electronics and pharmaceuticals, which constitute a significant portion of Indian exports to the US. Unlike the EU, India faces a competitive disadvantage without similar exemptions or reduced tariffs.

India's Energy Imports from Russia Add Complexity

India's continued imports of Russian oil and defense equipment further complicate negotiations. While India may increase imports of US crude oil and LNG, it remains reluctant to do so under pressure, reflecting its strategic autonomy in energy policies.

Trade Deficit and Future Negotiations

With a $45.7 billion trade deficit with India in 2024, the US has threatened penalties over India's trade with Russia. The outcome of these negotiations could significantly impact India's economic growth and trade relations.