Indian exporters warned that additional US tariffs risked making businesses “not viable” after President Donald Trump ordered steeper levies on Indian goods over New Delhi’s purchasing of Russian oil.
Stocks opened marginally lower on Thursday, with the benchmark Nifty index down 0.31 per cent after an initial 25pc US tariff came into effect.
But that will be doubled in three weeks, after Trump signed an order Wednesday to impose an additional 25pc levy for New Delhi’s continued purchase of Russian oil, a key revenue source for Moscow’s war in Ukraine.
India is the second-largest buyer of Russian oil, saving itself billions of dollars on discounted crude.
India’s foreign ministry condemned Trump’s announcement of further tariffs, calling the move “unfair, unjustified and unreasonable”.
S.C. Ralhan, president of the Federation of Indian Export Organisations (FIEO), said he feared a troubling impact.
“This move is a severe setback for Indian exports, with nearly 55pc of our shipments to the US market directly affected”, he said in a statement.
“The 50pc reciprocal tariff effectively imposes a cost burden, placing our exporters at a 30–35pc competitive disadvantage compared to peers from countries with lesser reciprocal tariff.”
Ralhan said “many export orders have already been put on hold” as buyers reassess sourcing decisions.
For “a large number” of small to medium-sized enterprises, profit “margins are already thin”, he said.
“Absorbing this sudden cost escalation is simply not viable”, he added.
The world’s fifth-largest economy — and most populous nation — is bracing for a bumpy ride, as the United States is its largest trading partner, with New Delhi shipping goods worth $87.4 billion in 2024.
“If the extra 25pc tariff that President Trump has announced on imports from India remains in place, India’s attractiveness as an emerging manufacturing hub will be hugely undermined”, Shilan Shah of Capital Economics said in a note.
US spending drives around 2.5pc of India’s GDP, Shah said.
But a 50pc tariff is “large enough to have a material impact”, he added, with the resulting drop in exports meaning the economy would grow by closer to 6pc this year and next, down from the 7pc they currently forecast.