No major impact of US tariffs on India’s growth, says S&P Global Ratings

Exemptions for electronics, especially smartphones, and pharmaceuticals will help cushion the blow, while India’s export exposure to the US is limited to about 2 percent of GDP

Ishaan Gera

August 13, 2025 / 16:29 IST

US tariffs may have no major impact on growth

India is unlikely to see a significant slowdown from higher US tariffs, S&P Global Ratings said on August 13, almost a week after 25 percent tariffs on Indian goods came into effect and another 25 percent Russia penalty was announced by American President Donald Trump.

“We don’t think tariffs imposed on India would have much of an impact on economic growth,” said YeeFarn Phua, director, sovereign & international public finance ratings, Asia, S&P Global Ratings. The agency expects India’s economy to grow at 6.5 percent in FY26.

Phua said exemptions for electronics, especially smartphones, and pharmaceuticals, will help cushion the blow, while India’s export exposure to the US is limited to about 2 percent of its GDP. Experts also highlighted that India’s large domestic market remains a key draw for investors, even in the face of higher tariffs.

India exported $86.5 billion worth of goods to the US in FY25, with nearly 55 percent of that at risk from the tariffs; the remainder falls under exemption and exclusion categories. Initially, the US has imposed a 25 percent duty over and above existing most-favoured nation rates. Trump doubled it to 50 percent for buying Russian oil, placing India among the world’s most tariffed nations alongside Brazil. The Russia penalty will kick in from August 27.

A Moneycontrol analysis found that India’s effective tariff rate of nearly 32 percent is more than double the average for Southeast Asian economies. Despite this, the government expects GDP growth to stay above 6 percent, supported by a favourable monsoon and stable crude oil prices.