Indian exporters warn businesses “not viable” as new
levies threaten trade with key partner
Zig Diaries Economy
Date: Thursday, 7 August 2025
Time: 07:54 WAT
Location:📍 New
Delhi, India
Indian businesses are sounding the alarm after former US President Donald Trump imposed a fresh round of punitive tariffs on Indian goods in response to New Delhi’s ongoing purchase of Russian oil.
The
Federation of Indian Export Organisations (FIEO) has warned that many exporters
could face closure after former US President Donald Trump signed an executive
order doubling tariffs on Indian goods — a move triggered by India’s continued
crude oil trade with Russia.
The initial 25 percent tariff came into
effect early Thursday, with India’s benchmark Nifty index slipping by 0.31 percent at market open. But Trump’s
order, signed on Wednesday, confirms a second
25 percent levy will follow in three weeks.
India’s
Ministry of External Affairs condemned the move, calling it “unfair,
unjustified, and unreasonable.”
President
of FIEO, S.C. Ralhan, said the
consequences could be devastating for exporters.
“This
move is a severe setback for Indian exports, with nearly 55 percent of our
shipments to the US market directly affected,”
Federation of Indian Export Organisations President, S.C. Ralhan said.
“The
50 percent reciprocal tariff effectively imposes a cost burden, placing our
exporters at a 30–35 percent competitive disadvantage compared to peers from
countries with a lesser reciprocal tariff.”
Ralhan
added that “many export orders have already been put on hold” as international
buyers rethink their sourcing decisions. For small to medium-sized Indian
exporters, he warned, “absorbing this sudden cost escalation is simply not
viable.”
India
is currently the second-largest buyer of
Russian oil, having saved billions through discounted crude. The US
government has repeatedly criticised the trade, saying it provides Moscow with
a critical revenue stream to fund its war in Ukraine.
Shilan Shah, an
analyst at Capital Economics, said the tariffs could undercut India’s ambitions
to become a global manufacturing hub.
“If
the extra 25 percent tariff that President Trump has announced on imports from
India remains in place, India’s attractiveness as an emerging manufacturing hub
will be hugely undermined,”
Capital Economics Analyst, Shilan Shah said.
The
US is India’s largest trading partner, with Indian exports to the American
market totaling $87.4 billion in 2024.
Analysts estimate that US consumer demand contributes around 2.5 percent of India’s GDP.
A
full 50 percent tariff on Indian goods, Shah added, is “large enough to have a
material impact,” potentially dragging India’s GDP growth from a projected 7
percent down to 6 percent over the next year.
#IndiaUS #TradeWar #TrumpTariffs #RussianOil #GlobalEconomy
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