Experts say India unlikely to budge, see Trump’s tariff move as negotiation tactic

US President Donald Trump announced on Wednesday a 25% tariff on goods imported from India starting August 1 and an unspecified penalty for buying Russian weapons and oil.

Trump’s decision dashes hopes of a limited trade agreement between the two countries, which had been under negotiation for several months.

MADHAVI ARORA, ECONOMIST, EMKAY GLOBAL

“While the negotiations seem to have broken down, we don’t think the trade deal haggling between the two nations is over yet. We see it more from the lens of geopolitics than purely economics and see both sides striving to get the deal done, even as the power equations may change a bit in US favour."

RANEN BANERJEE, PARTNER OF ECONOMIC ADVISORY, PWC INDIA

“Higher tariffs for India compared to countries it competes with, for exports to the U.S., are going to be challenging.

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However, the expectation is that the trade deal is likely to be finalised shortly and hence the period of applicability of these higher tariffs could be short."

NILESH SHAH, MD KOTAK MAHINDRA AMC

“Despite the unpredictable policy making of the U.S., the market was expecting a tariff deal to work out as longer-term U.S.-India strategic interests are aligned.

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I hope and pray that this unilateral imposition should accelerate Indian policy making to be growth supportive. Our biggest deterrence continues to remain GDP size and competitiveness."

AGNESHWAR SEN, TRADE POLICY LEADER, EY INDIA

“The decision to raise the U.S. tariff to 25% on Indian exports is an unfortunate development, particularly given the strong strategic partnership that has been steadily built between India and the USA in recent years.

However, it’s important to note that both countries remain positively engaged in active negotiations with the U.S. team expected in India later in August to finalize a comprehensive trade agreement."

Rohit Arora, CEO and Co-founder, Biz2Credit and Biz2X

“As both India and the US work toward deepening their economic ties through the proposed FTA, it is important that the dialogue remains constructive, forward-looking, and inclusive. This presents an opportunity to shape a trade framework that is equitable, future-ready, and supportive of innovation-led growth. MSMEs, which form the backbone of India’s economy, stand to benefit significantly from improved market access, technology exchange, and a more enabling regulatory environment. It will be important for both economies to strike a balance that fosters competitiveness, encourages investment, and supports sustainable value creation across sectors.”

KIRIT BHANSALI, CHAIRMAN, GEM AND JEWELLERY EXPORT PROMOTION COUNCIL INDIA

“This is a deeply concerning development. The Indian gem and jewellery sector, in particular, stands to be severely impacted.

The United States is our single largest market, accounting for over $10 billion in exports - nearly 30% of our industry’s total global trade. A blanket tariff of this magnitude will place immense pressure on every part of the value chain.

We recognise the need to address trade imbalances, but such extreme measures undermine decades of economic cooperation. We urge the U.S. administration to reconsider, and call on both governments to engage in constructive dialogue that safeguards bilateral trade and protects the millions of jobs that depend on it on both sides."

N. THIRUKKUMARAN, GENERAL SECRETARY OF TIRUPPUR EXPORTERS’ ASSOCIATION

“It is just a negotiation tactic. Trade negotiations are ongoing. The Indian government is tough on certain terms like agriculture and dairy — India isn’t opening up.

If it goes through, U.S. exports from the association will be affected, because Vietnam has lower tariffs. We will be losing our competitive edge.

We are optimistic that an imminent trade agreement will be on the lines of the one with the UK. We have to wait and watch, and not panic. There is no reason to panic."

GARIMA KAPOOR, ECONOMIST, INSTITUTIONAL EQUITIES, ELARA SECURITIES, MUMBAI

“Overall, we continue to see a deal by end Q3 but, a kneejerk reaction in Indian asset classes is likely in the near term."

S.C. RALHAN, PRESIDENT OF THE FEDERATION OF INDIAN EXPORT ORGANISATIONS

“This is a major setback for Indian exporters, especially in sectors like textiles, footwear, and furniture, as the 25% tariff will render them uncompetitive in the US market against rivals from Vietnam, China, and elsewhere.

However, we remain hopeful that both countries will work towards a bilateral trade agreement."

AVINASH GORAKSHAKAR, DIRECTOR OF RESEARCH AT PROFITMART SECURITIES

“Until the final document is released, it’s all speculation. India is a large, attractive market that the U.S. cannot afford to ignore, so any move will ultimately be weighed against long-term interests. My sense is that the August 1 deadline may itself be flexible and India is unlikely to budge easily.

In the short term, the announcement could trigger some selling pressure, but in the longer term, I expect the impact to neutralize. India’s market attractiveness remains intact."

COLIN SHAH, MD, KAMA JEWELRY

“With U.S. being one of the key export destinations, this will severely impact the sectors like gems and jewellery that are heavily dependent on exports.

Going ahead, we expect trade activities to remain muted with U.S. However, we also need to wait and watch how the situation unfolds."

RAHUL MEHTA, CHIEF MENTOR, CLOTHING MANUFACTURERS ASSOCIATION OF INDIA

“Having seen the several about turns on the tariff front in the case of other countries, I would not press panic buttons right now. But, if the proposed terms do come into effect, it will make our products 7% to 10% more expensive than some of our competitors, and it will certainly hurt our apparel exports to the U.S.

Fortunately, this set-back has come at the time when we have just signed an FTA with UK, and are proceeding rapidly with an FTA with EU."

SAKSHI GUPTA, PRINCIPAL ECONOMIST, HDFC BANK, GURUGRAM

“For now, the announcement of 25% tariffs is likely to cause volatility in the FX market with mounting depreciation pressure on the rupee. Although the RBI is likely to intervene tomorrow to tamp down the depreciation pressure."

ADITI NAYAR, CHIEF ECONOMIST, ICRA

“When the U.S. had initially imposed tariffs, we had lowered our forecast of India’s GDP expansion to 6.2% for FY2026, presuming a tepid rise in exports and a delay in private capex. The tariff (and penalty) now proposed by the U.S. is higher than what we had anticipated, and is therefore likely to pose a headwind to India’s GDP growth. The extent of the downside will depend on the size of the penalties imposed."

ASHOK CHANDAK, PRESIDENT, INDIA ELECTRONICS & SEMICONDUCTOR ASSOCIATION

“The imposition of a 25% tariff by the U.S. on Indian goods will be short term. Indian electronics exports is a short-term challenge that could disrupt supply chains and dent price competitiveness.

India does not have any major advantage compared to other Asian countries anymore if 25% tariff above baseline 10% is continued. However, it also underlines the urgency for India’s electronics sector to diversify export markets, deepen domestic markets, develop Indian brands and products, and move up the value chain to reduce dependency on price-sensitive, tariff-exposed exports."

RISHI SHAH, PARTNER AND ECONOMIC ADVISORY SERVICES LEADER, GRANT THORNTON BHARAT

“Given the escalating rhetoric around Russia-Ukraine negotiations, some form of adverse development was anticipated… the specifics of the additional ‘penalty’ beyond the 25% tariff may determine the actual economic impact."

HARSHA VARDHAN AGARWAL, PRESIDENT, FEDERATION OF INDIAN CHAMBERS OF COMMERCE AND INDUSTRY

“We hope that this imposition of higher tariffs will be a short-term phenomenon and that a permanent trade deal between the two sides will be finalised soon.

The aim is to secure a beneficial pact rather than a hurried deal that gives short term benefit but may result in adverse outcomes in the long term.

It is also important to note that India offers a large market for U.S. businesses and many of the large companies from the U.S. benefit from leveraging the demand as well as the skills and talent pool that we have to offer."