New Tariffs to Hit $8.1 Billion of Indian Exports, but Economic Impact "Manageable," Says PHDCCI

A new analysis by the industry body PHD Chamber of Commerce and Industry (PHDCCI) indicates that while the recent reciprocal tariffs imposed by the US will impact approximately $8.1 billion worth of India's exports, the overall economic effect on the country is expected to be manageable. The report comes as U.S. President Donald Trump has once again threatened to "substantially" increase the existing 25% tariff on Indian goods, citing New Delhi's continued purchase of Russian oil.

The PHDCCI analysis, released today, suggests that the 25% tariff will have a limited effect on India's overall economy. According to the study, the estimated impact on India's total global merchandise exports is just 1.87%, and a "negligible" 0.19% on India's GDP. This assessment offers a more optimistic view compared to some other projections and suggests that India's domestic resilience and economic diversification will help absorb the shock.

The study pinpointed several key sectors that will be most affected by the tariffs:

Engineering goods: The report estimates an impact of $1.8 billion on this sector.
Electronic goods: A potential impact of $1.4 billion.
Pharmaceuticals: Tariffs could affect exports worth $986 million.
Gems and jewelry: The impact is estimated at $932 million.
Readymade garments: This sector could see an impact of $500 million.

In response to the tariff challenges, PHDCCI President Hemant Jain stated, "The tariff challenge accelerates India's need for export sophistication and geographic diversification." He highlighted that the situation presents an opportunity for Indian businesses to enhance their long-term competitiveness. Similarly, PHDCCI CEO and SG Ranjeet Mehta emphasized that India's robust domestic demand and diversified economy provide a crucial buffer against the external pressures.

 He urged Indian businesses to use this as a chance to accelerate market diversification and value addition strategies.

The analysis provides a measured perspective on the escalating trade tensions between the two nations. While the tariffs are a significant challenge for specific export sectors, the report suggests that at a macroeconomic level, the impact is not severe enough to derail India's economic growth trajectory. The recommendations from the industry body focus on strategic responses to mitigate the impact, such as seeking new markets and focusing on high-value products.

Also Read: Why India's Self-reliance Will Outlast Trump's Tariff Gambit