For now, the world is watching a high-stakes drama unfold. Will India bow, break, or bounce back?
Economists warn that while the extreme US tariffs amount to “economic blackmail,” they could also serve as shock therapy for India to shed complacency and reduce dependence.
If industry, policymakers, and diplomats act in concert, today’s tariff terror could become tomorrow’s trigger for transformation, they added.
“The task ahead is difficult, but with sincerity of purpose and concerted efforts, we can — and we will — surmount this challenge. What is required is to go full steam ahead and fire on all cylinders,” said Manoranjan Sharma, Chief Economist at Infomerics Ratings.
For now, the world is watching a high-stakes drama unfold. Will India bow, break, or bounce back?
From August 27, every Indian export landing on American shores will face a 50 per cent tariff wall.
The pretext? India’s continued purchase of Russian oil and arms. The effect? A sledgehammer blow to the world’s fastest-growing major economy and a reckless gamble with one of America’s most consequential partnerships.
“For decades, India and the US have worked to stitch together an intricate tapestry of trade, technology, defence and diplomacy. Now, with one sweeping stroke, that fabric risks being torn asunder,” said Sharma.
The US is India’s largest export destination, taking nearly 17 per cent of our goods – pharma, textiles, jewellery, auto components, and engineering products. A flat 50 per cent tariff makes these exports instantly uncompetitive.
In the textiles and apparel sectors, margins will evaporate where pennies decide contracts and millions of livelihoods are at stake.
“Indian generics – lifelines for American households – will lose market share to rivals with easier access. Ironically, American consumers will pay the price, too,” Sharma noted.
Gems and jewellery, a labour-intensive industry that sparkles in India’s export crown, could suddenly go dim.
In the engineering and auto components sector, factories risk slowdowns and workers risk pink slips.
Exports worth $48 billion are directly in the line of fire. The tariffs could also shave off 0.3–0.5 percentage points of GDP growth.
According to economists, if India uses this defining moment to accelerate ‘Make in India 2.0’, strengthen supply chains, and diversify export markets, the pain could sow the seeds of long-term gain.
India’s manufacturing base, stuck at 14 per cent of GDP, must expand if we are to withstand shocks of this scale, they added.
