Impact of US Tariffs on Indian Economy

The recent 50% tariff imposed by the US on Indian imports is sending shockwaves through India's labor-intensive and manufacturing sectors. Experts warn of a significant slowdown in exports and investment, alongside increased pressure on the Indian rupee.

Concerns Over Labor Market and Economic Growth

"The second-round impact on private capex, domestic manufacturing as well as labour markets could emerge as a key risk over the coming months," says Sakshi Gupta, principal economist at HDFC Bank. Sectors like gems and jewellery, textiles, leather, and footwear are particularly vulnerable.

US Announces Additional Tariffs

US President Donald Trump has introduced an additional 25% tariff on India, citing national security concerns related to its crude oil trade with Russia. This brings the total tariff on Indian goods to 50%, with the first phase effective from August 7.

Economic Forecasts Downgraded

Economists are revising India's GDP growth projections downward, with estimates suggesting a potential 0.4% decrease in FY26 growth. The rupee is also expected to face renewed pressure amidst rising global trade tensions.