US Tariffs on India to have "Negligible" Impact on GDP and Exports

A study by PHDCCI estimates that US tariffs on Indian goods will have a "negligible" impact on India's GDP, affecting only $8.1 billion of exports to the US. The tariffs, which come into effect on August 7, 2025, may impact engineering goods, gems and jewelry, and ready-made garments. The study recommends measures to mitigate the impact, including increasing market penetration, product development, and market diversification.

A recent study by the PHDCCI (Pharmaceuticals and Healthcare Development Council of India) has estimated that the impending US tariffs on Indian goods will have a "negligible" impact on India's GDP. The tariffs, which are set to come into effect on August 7, 2025, are expected to affect only $8.1 billion of exports to the US. The sectors most likely to be impacted include engineering goods, gems and jewelry, and ready-made garments [1].

The study, released on July 2, 2025, suggests that the impact of the tariffs on the broader economy will be minimal. This is due to the relatively closed nature of the Indian economy, which relies more on domestic demand than on international trade. The study also recommends several measures to mitigate the impact of the tariffs, including increasing market penetration, product development, and market diversification [1].

While the study provides a reassuring outlook, it is important to note that the actual impact of the tariffs may vary depending on the final terms of the trade agreement between India and the US. The US has previously imposed tariffs on Indian goods, including a 25% tariff plus additional penalties for Russian imports, which has been criticized for potentially impacting key sectors such as marine products, pharmaceuticals, textiles, leather, and automobiles [2].

Despite the potential impact on specific sectors, the broader economic impact of the tariffs is expected to be limited. The Indian economy is projected to grow at 6.5% by the Reserve Bank, with the International Monetary Fund (IMF) and Asian Development Bank (ADB) pegging growth at 6.4% and 6.5% respectively [2].

In conclusion, while the US tariffs on Indian goods may have some impact on specific sectors, the overall impact on India's GDP is expected to be minimal. The study by PHDCCI provides a useful framework for understanding the potential impact of the tariffs and suggests measures to mitigate any negative effects.

References:
[1] https://www.bbc.com/news/articles/c0j91p8w20vo
[2] https://economictimes.indiatimes.com/news/economy/indicators/higher-us-tariffs-may-trim-indias-gdp-growth-by-30-bps-barclays/articleshow/123014106.cms