U.S. President Donald Trump has escalated his tariff policy, raising the reciprocal tariff on Indian exports from 25% to 50%, citing India’s ongoing purchases of Russian oil as the primary justification. According to Indian officials, this sweeping levy will affect approximately 55% of India’s total merchandise exports to the U.S.. Trade bodies warn that without early exemptions or a phased approach, tens of thousands of export-oriented jobs could be at risk over the next 12 months.

Economic Growth Takes a Hit: Credit rating agency Moody’s projects a reduction of 0.3 percentage points in India’s real GDP growth (from an estimated 6.3% for FY 2025–26), as the shock from these punitive tariffs disrupts high-value manufacturing and complicates energy imports. Goldman Sachs offers a grimmer scenario, suggesting a potential 0.6-point drag on GDP, while reaffirming overall growth near 6.5% should diplomatic progress follow. Beyond headline GDP estimates, industry associations warn of a cascading effect on supply chains, particularly in logistics, packaging, and ancillary manufacturing linked to export-oriented sectors. Smaller suppliers, who often operate on thin margins, could face cash-flow crunches within a quarter unless relief measures are........

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