From job creation to a potential impact on India’s current account deficit, here are 10 things to know about the potential consequences of a 50% tariff imposed by the US Administration on Indian imports.
1 / 11The levy of an additional 25% on Indian exports to the US has taken effect on Wednesday, August 27, at 9:31 AM Indian Standard Time. There are 10 important things you need to know in this regard. Here’s a look at them:
2 / 11India faces one of the harshest tariff regimes in the world. JPMorgan estimates India’s effective rate on exports to US jumps to 34% – second only to China & far above ASEAN’s 16%.
3 / 11JPMorgan estimates roughly 1.1% of GDP in domestic value-added exports to the US is exposed, with textiles & machinery the most at risk given their high value-add and labour intensity.
4 / 11Textiles look especially vulnerable. Tariffs at 50% would erase India’s price advantage in categories like cotton bedlinen & jerseys, handing competitiveness to Bangladesh & Vietnam. Most of these textile companies, from Gokaldas to Indo Count, to Welspun Living, derive 20% to 70% of their overall topline from the US market.
5 / 11Gems & jewellery is also hit hard. A 50% duty risks crimping demand in a sector that is both export-reliant and a major employer in Gujarat & Maharashtra.
6 / 11The growth cost could be material. At 50%, India would lose market share outright, threatening jobs & consumption in labour-heavy industries.
7 / 11India had hoped to lure investment on the premise of lower duties relative to ASEAN rivals. A punitive tariff regime undermines that thesis & risks deterring FDI & tech transfer.
8 / 11India’s Current Account Deficit (CAD) is modest (0.6% of GDP), but capital inflows have dried up. JPMorgan says a sustained tariff shock could widen the CAD towards 1.5% & aggravate Balance of Payments (BoP).
9 / 11Reserves offer cover but not immunity. FX reserves of $638B provide a buffer. Yet the Rupee has been reliant on fickle portfolio flows.
10 / 11The real blind spot lies in services. India’s exports of IT & business services to the US are three times larger than goods, worth nearly 6% of GDP. While untouched for now, any US move on services would strike at the heart of India’s growth model.
11 / 11The stakes go beyond tariffs. At issue is India’s integration into global value chains. Absent a trade deal with the US, India risks not just lost exports but diminished investment & slower job creation.
