US Tariffs Expected to Impact Only 0.19% of India's GDP: Industry Report

New Delhi – The proposed US tariffs on Indian goods are expected to have a minimal impact on the Indian economy, affecting just 0.19% of the country’s GDP, according to industry estimates released on Wednesday.

The tariffs, set to take effect on August 7, would impact exports to the US worth around $8.1 billion, the industry think tank PHD Chamber of Commerce and Industry (PHDCCI) said in its report.

“Our analysis shows that the US tariffs would affect only 1.87% of India’s global merchandise exports and just 0.19% of GDP – a manageable level,” the report noted.

The new 25% US import tariffs are expected to hit key Indian sectors such as engineering goods ($1.8 billion), electronic items ($1.4 billion), pharmaceuticals ($986 million), gems and jewellery ($932 million), and ready-made garments ($500 million).

To mitigate the effects, PHDCCI recommended a four-pronged strategy, including:

• Deepening penetration into the US market through bundled pricing deals with major retailers,

• Leveraging the Indian diaspora network and securing long-term offtake agreements to ensure steady demand,

• Developing premium product variants and co-innovating with US buyers for customised specifications,

• Redirecting exports to other markets like the EU, Canada, and Latin America, while taking advantage of recently signed Free Trade Agreements (FTAs).

The report also mentioned concerns about further penalties, as US President Donald Trump has hinted at additional action over India’s continued oil imports from Russia.

Despite these challenges, India remains the fastest-growing major economy, with the IMF projecting a 6.4% GDP growth for 2025.

Hemant Jain, President of PHDCCI, remarked, “This tariff situation highlights the urgency for India to diversify both in terms of product value and export destinations. Our strategy lays the foundation for turning this disruption into a long-term competitive advantage.”

Echoing the sentiment, Ranjeet Mehta, CEO and Secretary General of PHDCCI, said, “While the 25% tariff poses short-term hurdles, India’s strong domestic demand and diversified economic base offer a cushion. This is an opportunity for Indian businesses to push ahead with diversification and value-added exports.”

With inputs from IANS