How US Tariffs Will Only Slightly Affect India’s Resilient Economy: Exploring the 0.1% GDP Impact

New Delhi – The PHD Chamber of Commerce and Industry (PHDCCI) recently shared that India’s economy is likely to be only slightly affected by new tariffs imposed by the US. They predict a mere 0.1% dip in GDP, thanks to India’s competitive pricing and supportive government policies.

PHDCCI President Hemant Jain highlighted that strong local manufacturing and strategic initiatives like the Production-Linked Incentive (PLI) scheme and ‘Make in India’ project will bolster India’s resilience in the face of these tariffs. They anticipate fruitful discussions with the US that could lead to a beneficial trade agreement by 2025.

Jain emphasized that India’s industrial strength will help offset the tariffs’ impact, allowing for easy recovery in the medium term. This is especially true as domestic consumption is set to rise, aiding industries like electronics, renewable energy, and pharmaceuticals.

India has become a significant consumer market, forming diverse supply chains with partners in the Middle East, South Africa, and beyond. Recent improvements in quality and price have boosted demand for Indian products.

According to a recent Morgan Stanley analysis, the Reserve Bank of India (RBI) might cut interest rates by 0.25% to support the economy in light of uncertain external demand. If growth risks increase, they might also increase government spending to stimulate domestic growth.

The US has introduced a hefty 27% tariff on Indian goods, and India’s Ministry of Commerce is examining these changes carefully. They are gathering insights from industry players and exploring any potential opportunities that may arise.

Mohit Singla, Chairman of the Trade Promotion Council of India, believes that most Indian products will remain unaffected. He pointed out that while the tariffs on India stand at 27%, tariffs on Chinese goods can be as high as 65%.

In agriculture, there may be some shifts, like potential new markets for shrimp in Venezuela and tea in Sri Lanka. Singla noted that this might encourage Indian firms to improve efficiencies and product quality over time.

Anuj Sethi from Crisil Ratings mentioned that the US has exempted pharmaceuticals from these tariffs to maintain access to affordable healthcare. In 2024, India exported $8 billion worth of pharmaceuticals to the US, which makes up 40% of the generics consumed there. This exemption should help sustain those exports.

India boasts over 650 manufacturing facilities approved by the US Food and Drug Administration (USFDA), second only to the US. These facilities represent a significant portion of the global supply chain for medications, which bodes well for India’s economy.

Overall, while challenges are on the horizon, India’s proactive measures and strong market fundamentals are likely to help it navigate the current trade landscape successfully.



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PHD Chamber of Commerce and Industry, Indian GDP, US reciprocal tariffs, domestic manufacturing, government policy measures, production-linked incentive schemes, Make in India, Atmanirbhar Bharat, Hemant Jain, bilateral trade agreement, fall 2025, price competitiveness, growth resilience, India-US trade relation.