NEW DELHI, India – A significant economic development unfolded today as the United States officially implemented a steep 50% tariff on various Indian goods. This measure, which came into effect on Wednesday, August 27, 2025, combines an initial 25% tariff with an additional 25% imposed due to India's ongoing purchases of Russian oil. The decision threatens a considerable blow to India's overseas trade, particularly in its largest export market, the U.S.

The Indian government estimates that these tariffs will impact approximately $48.2 billion worth of its exports. Sectors expected to face the most severe consequences include textiles, gems and jewelry, leather goods, food, and automobiles. Experts from the New Delhi-based think tank Global Trade Research Initiative (GTRI) suggest that Indian exports to the U.S. could drop from $86.5 billion to around $50 billion by 2026, with some sectors like textiles, gems, jewelry, and shrimp bracing for a 70% collapse in exports, potentially endangering hundreds of thousands of jobs. Concerns have been raised by exporters and analysts about potential job losses and slower economic growth in India.

Despite these challenges, the Reserve Bank of India (RBI) has maintained its growth forecast, projecting India's real GDP growth at 6.5% for 2025-26, indicating an expectation that the economy can absorb the tariff shock. India's GDP grew 6.5% in 2024–25, making it the fastest-growing major economy globally.

In response to the tariffs, the Indian government is working on a multi-pronged strategy. This includes pursuing local reforms to boost domestic consumption, such as changes to the goods and services tax (GST) to lower costs for insurance, cars, and appliances ahead of the Diwali festival. The Trade Ministry and Finance Ministry are also discussing financial incentives like favorable bank loan rates for exporters. Furthermore, India is looking to expand exports to other regions, including Latin America, Africa, and Southeast Asia, and accelerate trade negotiations with the European Union to reduce dependence on the U.S. market. Prime Minister Narendra Modi has reaffirmed his commitment to protecting the interests of farmers, small businesses, and dairy sectors, vowing not to yield to U.S. pressure and advocating for a "Swadeshi" (self-reliance) mantra.

The Indian stock and commodity markets remained closed on Wednesday, August 27, 2025, due to the Ganesh Chaturthi holiday. Analysts anticipate volatility in the near term once markets reopen on Thursday, with export-linked stocks likely to face pressure and potential earnings downgrades. However, domestic demand-driven sectors and defensives like pharma and IT services may see increased interest.