The imposition of a 25 per cent US tariff on Indian goods from August 1, along with an unspecified penalty over India’s continued trade with Russia, could weigh on India’s GDP growth and export prospects, experts have warned. Sectors such as pharmaceuticals, gems and jewellery, textiles, and automobiles are likely to be most affected. While the tariff blow is expected to lower India’s GDP by up to 30 basis points, analysts believe the impact could be mitigated through an eventual trade agreement between the two countries, helped by India’s domestic demand-driven growth model, according to PTI.
ICRA : Growth forecast may be downgraded if penalty is severe
ICRA Chief Economist Aditi Nayar said the US move was harsher than previously anticipated. “We had already factored in a lower growth projection of 6.2 per cent for FY26 due to earlier tariffs. Now, the new 25 per cent tariff plus the penalty could pose a sharper headwind,” she said, adding that the exact impact will depend on how steep the penalty turns out to be.
EY: Active trade engagement still offers hope
EY India’s Trade Policy Leader Agneshwar Sen stressed the importance of the ongoing bilateral negotiations. “Given the shared history and strategic partnership, both sides can resolve these contentious issues constructively and reach a mutually beneficial agreement,” he said.
Barclays: India’s domestic demand limits gdp hit
Barclays estimates that the new tariffs could shave off 30 basis points from GDP in FY26, but India’s relatively closed economy will cushion the blow. “We expect the final tariff to settle below 25 per cent as talks progress,” it said. It also highlighted that the Indian rupee is oversold, though pressure will persist in the short term.
Elara Capital: India’s disadvantage vs others
Garima Kapoor, economist at Elara Capital, said the tariff makes India less competitive compared to peers like Vietnam and Indonesia, which face lower duties. The uncertainty around pharma inclusion is particularly worrying, she noted, since the US accounts for over 30 per cent of India’s pharmaceutical exports. “If no deal is signed by September-October, we see a downside to full-year GDP growth estimate for India by 20 basis points,” she said.
Grant Thornton: Market will adapt despite geopolitical shocks
Rishi Shah of Grant Thornton Bharat said the economic ecosystem is resilient. “Markets adjust, and new equilibria emerge. The multi-alignment strategy followed by India will help it navigate such shocks,” he added.
Moody’s Analytics: Pharma, gems, and dairy access are key flashpoints
Aditi Raman of Moody’s Analytics said India’s relative insulation from global trade shocks is a plus, but the tariffs will hurt key sectors. She pointed out that agriculture and dairy access remain sensitive issues in US-India negotiations.
Artha Bharat Fund: Tariff high but not a surprise
Nachiketa Sawrikar of Artha Bharat Global Multiplier Fund said the government likely expected such a move. “China already faces a 30 per cent tariff. India’s rate could have been worse, though it still puts us behind ASEAN peers,” he said.
FED: India now worse off than competitors like China
Rahul Ahluwalia of the Foundation for Economic Development said the 25 per cent tariff puts India at a disadvantage against countries like China and Vietnam. “India must act fast to secure a favourable deal,” he warned.
Choice broking: Temporary blow to investor confidence
Utsav Verma, Head of Research at Choice Broking, said sectors such as pharma, auto components, and textiles may see a short-term dip in investor sentiment. However, he believes the tariff will likely settle closer to 15 per cent once negotiations progress.
Medical Technology Association: Tariffs politically and strategically misguided
Chairman Pavan Choudary called the move “economically shortsighted and strategically inappropriate.” He said coercive trade measures in response to India’s sovereign decisions on defence and energy partnerships with Russia are “counterproductive.”
