50% tariffs on India take effect — 10 things you need to know
Published on 27/08/2025 11:15 AM
From job creation to a potential impact on India's current account deficit, here are 10 things to know about the potential consequences of a 50% tariff imposed by the US Administration on Indian imports.The levy of an additional 25% on Indian exports to the US has taken effect on Wednesday, August 27, at 9:31 AM Indian Standard Time. There are 10 important things you need to know in this regard. Here's a look at them:India faces one of the harshest tariff regimes in the world. JPMorgan estimates India’s effective rate on exports to US jumps to 34% - second only to China & far above ASEAN’s 16%.JPMorgan estimates roughly 1.1% of GDP in domestic value-added exports to the US is exposed, with textiles & machinery the most at risk given their high value-add and labour intensity.Textiles look especially vulnerable. Tariffs at 50% would erase India’s price advantage in categories like cotton bedlinen & jerseys, handing competitiveness to Bangladesh & Vietnam. Most of these textile companies, from Gokaldas to Indo Count, to Welspun Living, derive 20% to 70% of their overall topline from the US market.Gems & jewellery is also hit hard. A 50% duty risks crimping demand in a sector that is both export-reliant and a major employer in Gujarat & Maharashtra.The growth cost could be material. At 50%, India would lose market share outright, threatening jobs & consumption in labour-heavy industries.India had hoped to lure investment on the premise of lower duties relative to ASEAN rivals. A punitive tariff regime undermines that thesis & risks deterring FDI & tech transfer.India’s Current Account Deficit (CAD) is modest (0.6% of GDP), but capital inflows have dried up. JPMorgan says a sustained tariff shock could widen the CAD towards 1.5% & aggravate Balance of Payments (BoP).Reserves offer cover but not immunity. FX reserves of $638B provide a buffer. Yet the Rupee has been reliant on fickle portfolio flows.The real blind spot lies in services. India’s exports of IT & business services to the US are three times larger than goods, worth nearly 6% of GDP. While untouched for now, any US move on services would strike at the heart of India’s growth model.The stakes go beyond tariffs. At issue is India’s integration into global value chains. Absent a trade deal with the US, India risks not just lost exports but diminished investment & slower job creation.NewsLive TVMarketPopular CategoriesCalculatorsTrending NowLet's Connect with CNBCTV 18Network 18 Group :©TV18 Broadcast Limited. All rights reserved.