US tariffs likely to impact just 0.19 pc of India's GDP: Industry

New Delhi, Aug 6
The proposed US tariffs on India will have a "manageable" impact on India's economy, affecting just 0.19 per cent of the country's GDP, industry leaders projected on Wednesday.

The tariff will affect exports to the US worth approximately $8.1 billion, industry think tank PHDCCI said in a report. “Our analysis estimates an impact of only 1.87 per cent on India's global merchandise exports and a negligible 0.19 per cent on India’s GDP due to US tariffs on India,” it added.

The United States' 25 per cent tariff on Indian imports is set to take effect on August 7. PHDCCI projected that the tariffs can impact the import of engineering goods ($1.8 billion), electronic goods ($1.4 billion), pharmaceuticals ($986 million), gems and jewellery ($932 million), and ready-made garments ($500 million).

The industry chamber proposed a four-pronged strategy to address the impact of tariffs. It suggested penetration of the US markets through bundled pricing negotiated with major US retailers.

"Leverage diaspora networks, and secure long-term offtake agreements to stabilise demand; develop premium export variants and co-innovate with US buyers on custom specifications," the report mentioned.

The industry chamber also asked to redirect exports to the EU, Canada, and Latin America while leveraging recently concluded FTAs. US President Donald Trump has also suggested an additional unspecified penalty on Indian imports due to the country's oil purchases from Russia.

The study highlighted that India continues to be the fastest-growing major economy at 6.4 per cent GDP growth (IMF July 2025 forecast) in the world.

"The tariff challenge accelerates India's need for export sophistication and geographic diversification. Our strategy framework provides a roadmap for converting this disruption into an opportunity for long-term competitiveness enhancement," said Hemant Jain, President, PHDCCI.

Ranjeet Mehta, CEO and SG, PHDCCI said, "While the 25 per cent US tariff presents challenges, India's robust domestic demand and diversified economy provide resilience. Our analysis shows the impact, though significant in absolute terms, remains manageable at the macro level. This presents an opportunity for Indian businesses to accelerate market diversification and value addition strategies.”