The new tariffs imposed by the Trump administration are beginning to significantly impact India's economy. A substantial reduction in exports is anticipated, along with job security concerns.
Economic Impact of Tariffs
According to Reuters, analysts expect Indian exports to shrink by over 40%, resulting in a $37 billion blow for the current fiscal year. The hardest hit sectors are likely to be labor-intensive industries such as gems, textiles, and jewelry, which are primary employment sources in the country.
Government's Response Measures
Although Prime Minister Narendra Modi has not made official statements, his silence is already affecting his political standing. With elections approaching in the key rural state of Bihar, voter anxiety is rising. In response, the government announced tax relief measures, including a plan to reduce goods and services tax by October.
India's Diplomatic Maneuvers
Indian diplomats are actively working to strengthen ties with Russia through visits to Moscow. Prime Minister Modi is also expected to visit China for the Shanghai Cooperation Organization summit, where he will meet with the leaders of Russia and China. However, Indian officials noted that no trilateral summit is planned, reflecting ongoing tensions from the 2020 border conflict with China.
The situation regarding the new US tariffs highlights the complexity of India's trade relationships and the need for a balanced foreign policy. The economic repercussions may have lasting effects on Indian markets and competitiveness.
