New Delhi– As the United States prepares to impose additional tariffs on Indian goods this week, analysts say the impact on India’s overall growth will likely be limited, thanks to strong domestic demand and sectoral resilience.
Beginning August 27, U.S. secondary tariffs of 25 percent will take effect on top of existing duties, bringing the total tariff burden to 50 percent. While some labor-intensive sectors such as textiles and gems and jewelry are expected to feel moderate pressure, industries like pharmaceuticals, smartphones, and steel remain relatively shielded due to exemptions and robust local demand.
According to S&P Global Ratings, the size of India’s domestic market will cushion much of the macroeconomic fallout from the tariff hike. However, the agency warned that exporters of capital goods, chemicals, automobiles, and food and beverages will face more difficult adjustments.
The U.S. is India’s largest export market for textiles, and India currently holds a 9 percent share, making it the third-largest exporter to the U.S. after China and Vietnam. Over the past five years, India’s share has grown from 6 percent to 9 percent, while China’s has dropped from 38 percent to 25 percent — a shift that underscores the U.S.’s reliance on Indian supply chains.
Market analysts believe domestic consumption-driven sectors such as financials, telecom, aviation, hotels, cement, and portions of capital goods are well positioned to weather external headwinds.
A recent Morgan Stanley report labeled India the “best placed country in Asia” amid global uncertainty fueled by President Donald Trump’s tariff threats, citing India’s relatively low goods exports-to-GDP ratio compared with its regional peers.
Similarly, Fitch Ratings noted that India’s large internal market reduces its vulnerability to external shocks. The agency projected that the economy will maintain 6.5 percent growth in fiscal year 2026 despite the U.S. tariff hike. (Source: IANS)
