NEW DELHI: The US tariff on Indian exports could impact several key sectors, including agriculture, energy, textiles, electronics, and gems & jewellery. Electronics, pharmaceuticals, and gems & jewellery are among the top Indian exports to the US. If the pharmaceutical sector, which had so far remained exempt, is brought under the ambit of the tariff, it could deal a severe blow to the industry.
The lack of clarity on the ‘Russia penalty’ leaves Indian exporters and US importers unable to calculate landed costs or plan supply chains effectively.
India has recently emerged as a major supplier of Apple iPhones to the US, accounting for 44% of all smartphones imported into the country. The tariff could, therefore, be a major setback for India’s fast-growing mobile manufacturing sector.
“This likely means iPhones will become more expensive for Americans. Even if India gains more production volume, the cost gap between China and India is narrowing,” said Tarun Pathak, research director, Counterpoint.
Also, the US president’s disapproval of purchase of discounted Russian oil places India’s energy security in a difficult position. “A significant spike in crude prices could increase India’s import bill and lead to under-recoveries for oil marketing companies,” said Prashant Vasisht, senior vice-president at ICRA. “A $10 per barrel rise in crude oil prices would raise the oil import bill by $13–14 billion,” he added.
India had ramped up purchases of Russian crude after the start of the Ukraine war, drawn by steep discounts. Earlier available at $10-16 per barrel below market rates, it is now discounted by just $2.5–4.
The tariff shock is expected to weigh on India’s GDP growth in the short to medium term.