Industry 'disappointed' as US Imposes 25% tariff on Indian goods

Higher-than-anticipated tariffs are likely to pose headwinds India’s GDP growth, say economists

Industry and economists have expressed concerns over the US government’s decision to levy a 25% tariff along with a "penalty" on Indian exports, starting August 1.

In a statement issued on Wednesday, FICCI said that it's "disappointed" by the US’ decision. "While this move is unfortunate and will have a clear bearing on our exports, we hope that this imposition of higher tariffs will be a short-term phenomenon and that a permanent trade deal between the two sides will be finalised soon," said Harsha Vardhan Agarwal, President, FICCI.

India has been actively negotiating a BTA with the US since the start of the year, and we understand that there had been some specific demands from the US side which are not in our national interest and therefore Indian government has not given in to those demands from the US. "Also, the US team is coming to India in latter half of August to further discuss on the BTA. We are hopeful that the two sides will make progress in their discussions and complete the negotiations by the September-October 2025," said Agarwal.

EY India’s Trade Policy Leader Agneshwar Sen also called the US’ decision an "unfortunate development", particularly given the strong strategic partnership that has been steadily built between India and the USA in recent years.

If this tariff is sustained, this move may directly affect key sectors such as marine products, pharmaceuticals, textiles, leather, and automobiles, where bilateral trade has been especially robust, noted Sen.

Meanwhile, economists said that the higher-than-anticipated tariffs are likely to pose headwinds to  India’s GDP growth, which is projected to grow 6.5 percent in FY26.

"When the US had initially imposed tariffs, we had lowered our forecast of India's GDP expansion to 6.2% for FY2026, presuming a tepid rise in exports and a delay in private capex. The tariff (and penalty) now proposed by the US is higher than what we had anticipated, and is therefore likely to pose a headwind to India's GDP growth. The extent of the downside will depend on the size of the penalties imposed," said Aditi Nayar, Chief Economist, ICRA.