Sharp Increase in US Tariffs on Indian Goods

The effective US tariff rate on Indian goods has seen a dramatic rise to 20.7 per cent in 2025, up from just 2.4 per cent in 2024, according to a recent Fitch Ratings report. This significant hike is part of broader trade tensions that are casting a shadow over the growth outlook for India.

Impact on India's Economic Growth

Economists are revising their growth expectations for India downwards, with Goldman Sachs cutting its projections for 2025 and 2026. The bank cites the tariff surge as a key factor, though it suggests some tariffs may be negotiated lower over time.

Long-term Effects on India's Manufacturing Ambitions

Christian de Guzman of Moody’s Ratings warns that restricted access to the US market could hinder India's aspirations to become a manufacturing hub, especially in high-value sectors like electronics. Despite these challenges, Moody’s remains optimistic about India's overall economic resilience.