Resilience Amid Global Shifts: Analysing the Impact of Trump Tariffs on the India Economy
This white paper by the PHD Chamber of Commerce and Industry (PHDCCI) provides a comprehensive, data-driven analysis of the newly imposed 25% U.S. tariffs on Indian exports. While the global trade landscape faces renewed volatility, the report highlights the inherent strength of the Indian economy today, projecting a manageable impact on the country’s macroeconomic trajectory.
Macroeconomic Stability and Growth Projections
According to the PHDCCI research, the potential export loss is estimated at approximately $8.1 billion. However, in the context of India’s massive trade portfolio, this represents only 1.87% of total global merchandise exports. Most significantly, the report indicates a negligible 0.19% impact on the national GDP. Despite these external headwinds, the India economy remains the fastest-growing major global player, with the IMF maintaining a robust growth forecast of 6.4% for 2025-26.
Sectoral Vulnerabilities and Emerging Competitiveness
The white paper identifies specific sectors with high exposure to the tariff regime:
- Engineering & Electronics: Faces the most significant potential loss, estimated at $1.8 billion and $1.4 billion, respectively.
- Pharmaceuticals & Jewelry: High-value segments that require strategic market adjustments.
- Agri-Food Resilience: Sectors like tobacco, coffee, and dairy continue to show double-digit growth, underscoring the rising global demand for Indian products.
PHDCCI’s Strategic Roadmap for Global Trade
To navigate this disruption, PHDCCI proposes a four-pronged strategy to ensure the Indian economy today continues its upward climb:
- Market Penetration: Negotiating bundled pricing with giants like Amazon and Walmart.
- Product Sophistication: Moving from commodity-based trade to “Make in India Select” premium sub-brands.
- Geographic Diversification: Accelerating FTAs with the UK and ASEAN to reduce U.S. dependency.
- On-shore Production: Encouraging joint ventures within the U.S. to mitigate duty impacts.
In conclusion, while the tariffs present a short-term challenge, PHDCCI’s analysis reaffirms that India’s diversified export base and strong domestic demand act as a powerful cushion, ensuring long-term competitiveness and economic sovereignty.