India is expected to face a limited impact from the recent US tariff hike on its exports, with direct losses estimated at just 0.3 to 0.4 percent of its GDP, according to a report by CareEdge Ratings. The report highlights that India&rsquo;s economy is largely domestic-focused, and its merchandise exports to the US represent only about 2 percent of GDP, helping reduce the overall effect.
Additionally, the country&rsquo;s services exports remain outside the scope of the US tariffs and are likely to continue supporting India&rsquo;s external sector performance. The report also projects the current account deficit to remain stable at around 0.9 percent of GDP in FY26.
India's exposure to oil imports from Russia is unlikely to cause major disruptions, as the price gap between Russian Ural and Brent crude has dropped to roughly $3 per barrel from last year&rsquo;s average of $20. This reduction eases pressure on the current account.
In FY25, India&rsquo;s merchandise exports to the US totaled $87 billion. Electronics accounted for the largest share at 17.6 percent, followed by pharmaceuticals at 11.8 percent and gems and jewellery at 11.5 percent. Some electronic items and pharmaceutical products have been temporarily exempted from the 25 percent US tariff, offering partial relief.
The report warns, however, that the risk of more sector-specific tariffs remains. India hosts one of the largest numbers of US FDA-approved generic drug manufacturing facilities. Although uncertainties persist, the sector&rsquo;s global competitiveness provides some protection.
With the new tariffs, India&rsquo;s earlier advantage over Asian peers such as Vietnam, Indonesia, and South Korea has diminished. There is also a possibility of further trade penalties linked to India&rsquo;s continued business with Russia.
Ongoing trade talks between India and the US could eventually ease tensions. However, India is expected to proceed cautiously, especially regarding sensitive sectors like agriculture and dairy. This caution may prolong negotiations.
According to CareEdge, it is too soon to identify clear winners and losers in the evolving trade landscape. Global financial volatility is likely to continue, and tariff-related developments will remain an important factor in shaping future economic trends. [Except for the headline, this article has not been edited by the Benefit News editorial team and is published directly from the IANS news feed]

US Tariffs May Cut India’s GDP by Just 0.4%

CareEdge report says India’s export loss from US tariff hike to stay below 0.4% of GDP

US Tariffs May Cut India’s GDP by Just 0.4%

CareEdge report says India’s export loss from US tariff hike to stay below 0.4% of GDP

August 1, 2025 | 21:40 IST