4 min read

Donald Trump’s 50% Tariff A Challenge To ‘Make in India’ Push, Says Moody’s

August 10, 2025

Donald Trump’s 50% Tariff A Challenge To ‘Make in India’ Push, Says Moody’s – Read full story below.

US President Donald Trump ‘s punitory 50 per cent duty on import from India could airs a serious challenge to New Delhi ‘s self-reliance ambition nether the Atmanirbhar Bharat missionary post. United states ‘s move, associate to India ‘s continue purchase of dismiss Russian oil, could not lone gnaw the state ‘s fabrication fight but besides decelerate the GDP ( Gross Domestic Product) growing by 0.3 per cent, harmonize to a new study by Moody ‘s Ratings.

Helen wills moody ‘s, nevertheless, predict that resilient domestic help demand and the strength of the services sector volition extenuate the strain on the economic system.

“ We undertaking that real number GDP growing may decelerate by about 0.3 percent point compare with our electric current prognosis of 6.3 per cent growing for financial 2025-26 ( termination March 2026). Nevertheless, resilient domestic help demand and the strength of the services sector volition extenuate the strain, ” note the study.

The study note that piece there volition be a blow to fabrication, particularly in high-value sector such as electronics and fabric, due to a decrease in demand in the US market. The US is India ‘s large exportation marketplace, devising up 18 per cent of export and 2.2 per cent of GDP.

“ Beyond 2025, the much wide duty gap compare with other Asia-Pacific state would badly restrict India ‘s ambition to develop its fabrication sector, peculiarly in higher value-added sector such as electronics, and may evening contrary some of the addition make in Holocene old age in attract associate investing, ” the evaluation federal agency add.

But the house warn that reduction Russian oil import to avoid punishment duty could brand it difficult for India to procure option petroleum supply in sufficient measure. Shift away from dismiss Russian petroleum could aid the importation measure, which would widen the electric current history shortage, particularly amid weak duty fight that could discourage investing inflow. This could, in bend, thrust up rising prices and widen the electric current history shortage.

“ We anticipate there volition likely be a negociate solution that falls betwixt the two scenario describe above, ” Moody ‘s state.

“ The magnitude of the retarding force on growing from duty obstacle volition influence the authorities ‘s determination to prosecute a financial policy response, although we expect the authorities volition adhere to its focusing on gradual financial and debt consolidation. ”

Nevertheless, Moody ‘s note that India ‘s significant foreign exchange militia supply a buffer against external daze.

Trump card enforce an extra 25 per cent duty on Indian good on Wednesday, pickings the sum duty to 50 per cent – far higher than those levy on other Asia-Pacific state. Helen wills moody ‘s note that India ‘s response volition be critical in determine the eventual consequence on growing, rising prices and external balance.

On Thursday, Indian Prime Minister Narendra Modi state he is ready to “ pay a very heavy monetary value ” for defy US attempt to dictate the state ‘s trade policy, as India take a noncompliant place in the aftermath of Trump ‘s bullying tactics.

In order to understate the impact of US duty on the Indian economic system, the Reserve Bank of India ( RBI) keep its key rates unchanged as expect and retain its “ neutral ” policy stance followers a surprise 50-basis-point rate cut in June.

Planetary trade uncertainty, fuel by the US duty, rich person already faze foreign investor. Foreign portfolio investor rich person sell $ 900 1000000 worth of Indian equity so far in August, after $ 2 one million million in escape in July, per a study by Reuters.

Republic of india has aggressively increase import of Russian petroleum since 2022, pickings vantage of dismiss rates as traditional buyer retreated followers Moscow ‘s invasion of Ukraine. Russian oil account for 35.5 per cent of India ‘s sum petroleum import in 2024, up from just 2.2 per cent in 2021, with the importation measure billow to USD 56.8 one million million from USD 2.8 one million million over the Lapp time period. Lone China buy Thomas More Russian petroleum than India stopping point twelvemonth.

Inexpensive Russian oil has play a key function in check India ‘s rising prices, which is at a multi-year low. Abandon these purchase could contrary that tendency.

(With input signal from ANI and Reuters)