New Delhi – India is preparing for a major trade setback as the United States moves to impose 50% tariffs on Indian exports starting Wednesday, August 27. The move, announced by the Trump administration in response to India’s continued purchase of Russian crude oil, threatens to hit some of the country’s most vital export sectors.
Prime Minister Narendra Modi struck a defiant tone, making clear that India would not compromise on protecting its farmers, small-scale industries, and domestic producers. “India will face this challenge with resilience,” he said, urging citizens to back homegrown businesses and reduce reliance on imports.
News of the tariff escalation rattled financial markets on Tuesday. The Sensex and Nifty fell sharply, while the rupee slid to a record low against the dollar, reflecting investor concerns over the deepening trade rift.
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Export bodies warned of immediate disruptions. Industries most at risk include textiles, gems and jewellery, leather goods, seafood, and MSMEs, while key segments such as electronics and pharmaceuticals are expected to remain unaffected for now. The Federation of Indian Export Organisations said several international buyers have already begun halting new orders in anticipation of higher costs.
Reserve Bank of India Governor Sanjay Malhotra sought to calm markets, saying the RBI stands ready to cushion the economy from the fallout. Liquidity has been strengthened in the banking system, and targeted support for vulnerable industries is being prepared.
“Whatever support is required, we will not be found wanting in our job,” Malhotra said at the FICCI-IBA Annual Banking Conclave, underscoring the central bank’s commitment to growth stability.
Government Response
Alongside central bank support, the government is expected to fast-track domestic reforms aimed at boosting competitiveness. Measures include incentives for exporters, diversifying trade partnerships, and strengthening domestic manufacturing under the Make in India initiative.
Officials stressed that while the immediate impact may be painful—potentially shaving up to one percentage point off GDP growth—India’s long-term fundamentals remain strong. Economists also noted that India’s diversified export markets across Asia, Africa, and Europe could help offset some of the U.S. shock.
