Impact of Trump's Tariff Order on Indian Economy

U.S. President Donald Trump's new executive order levies an additional 25% tariff on Indian goods, citing India's indirect importation of Russian oil. This raises the total tariff rate to 50%, matching Brazil's highest levy, which could disadvantage India's export market against competitors like Vietnam and Bangladesh.

Prominent economists, including A. Prasanna of ICICI Securities and Sakshi Gupta of HDFC Bank, express concern over the anticipated negative impact on Indian exports, although sectors such as electronics and pharmaceuticals remain tariff exempt. This could necessitate a recalibration of India's GDP growth forecasts for FY26, potentially lowering them below 6%, according to Teresa John of Nirmal Bank Institutional Equities.

Facing mounting pressure, India might negotiate to reduce Russian oil imports, gradually diversifying its sources. While Manoj Mishra from Grant Thornton Bharat notes the modest impact on India's GDP, the situation underscores the importance of diversifying export markets to mitigate risks. Economist Mayuresh Joshi advises leveraging India's free trade agreement network to maintain export resilience and growth.

(With inputs from agencies.)