US Tariffs on Indian Imports
The United States has imposed an additional 25 percent tariff on imports from India, which is on top of a 25 percent reciprocal tariff.
US Motives and Comparisons
- The US believes India's import of Russian oil funds the Ukraine war.
- China, despite larger imports from Russia, has not been targeted, possibly due to fears of retaliation.
Impact on Indian Exports
- India exported goods worth $86.5 billion to the US in 2024-25, with a trade surplus of over $41 billion.
- Electronics and pharma are initially exempt from tariffs but could be included later.
- Industries like apparel, which exported about $10.8 billion to the US in 2024, face uncertainty.
- There is a risk of large-scale job losses due to these tariffs.
Strategic Adjustments
- India needs to engage with the US, despite the lack of negotiation avenues currently.
- India imports Russian oil due to discounts from Western sanctions but is considering shifting imports gradually.
- The discount on Russian oil has significantly reduced, resulting in moderate savings of $15 billion from January 2022 to June 2025.
- An additional cost of $1.5 billion annually is projected if India shifts imports, though global oil prices could rise.
Economic Implications
- India's current account deficit (CAD) is manageable despite potential shifts in oil imports.
- The closure of the US market could have more severe impacts on CAD, growth, and employment.
Overall, India must navigate this situation carefully to protect its economic interests and avoid deteriorating relations with the US.
