August 13, 2025
India’s exposure to US exports is about 2% of GDP, making it less vulnerable to trade-related shocks
Sectors most reliant on US markets, such as pharmaceuticals and consumer electronics, are exempt from the new tariffs
India’s GDP is projected to grow at 6.5% in 2024–25, matching the previous year’s pace
Investment flows are expected to remain strong, driven by domestic demand and the ‘China plus one’ strategy
India’s economic growth and positive sovereign ratings outlook are unlikely to be affected by the latest round of punitive tariffs imposed by US President Donald Trump, according to S&P Global Ratings. Experts said the limited role of trade in India’s economy and its small export exposure to the US mean the impact will be negligible.
New Delhi is facing a 50% US tariff on certain imports, with 25% taking effect on 7 August and another 25% due on 28 August, imposed as a penalty for buying Russian oil.
Experts note India is not a trade-oriented economy, with exports to the US accounting for only about 2% of GDP. Sectors such as pharmaceuticals and consumer electronics, which are among India’s main exports to the US, are exempt from the tariffs.
S&P upgraded India’s sovereign rating outlook to positive in May last year, citing robust economic growth. The ratings agency expects GDP growth to remain steady at 6.5% in the current fiscal year, matching the previous year’s performance. Phua said that, over the longer term, higher tariffs are not expected to significantly harm the economy, and the positive outlook remains intact.
On the question of whether US tariffs could deter investment into India, the ‘China plus one’ strategy has already encouraged companies to expand operations in India, primarily to serve domestic demand rather than rely solely on exports to the US. The country’s growing middle class is an additional draw for foreign businesses.
The US was India’s largest trading partner between 2021 and 2025, accounting for 18% of India’s total goods exports, 6.22% of imports, and 10.73% of bilateral trade. In 2024–25, bilateral trade reached US$186 billion, with India exporting US$86.5 billion worth of goods and importing US$45.3 billion. India recorded a trade surplus with the US of US$41 billion in 2024–25, up from US$35.32 billion the previous year.
Source: NDTV