India’s economy is sailing through stormy seas following US, under President Donald Trump, imposing a high 26% tariff on Indian imports. Although government officials are still hopeful, estimating 6.3% to 6.8% growth in the 2025/26 fiscal year, private economists are not so sure. They predict that the tariff shock would bring India’s momentum to a standstill.
The authorities contend that as long as crude oil prices remain below $70 per barrel, India can still achieve its growth rates. Budget allocations already account for duty remission schemes to aid exporters. Relief may be forthcoming. Ministries are actively negotiating with export bodies to assess the damage and frame a response.
Sectoral Impact and Economic Doubts
Private companies such as Goldman Sachs have cut India’s growth estimate by 20-40 basis points, blaming the disruptions generated by Trump’s tariffs. The diamond sector, which exports more than one-third of its shipments to America, is especially at risk, with thousands of jobs at stake.
The auto industry is not too far behind. Tata Motors stocks fell 10% when Jaguar Land Rover suspended exports to America. Other sectors such as IT are preparing themselves for lower foreign demand as US consumer spending, which is inflating, reduces. These news items test the government’s defiant attitude.
Strategic Choices Over Retaliation
India isn’t striking back with counter-tariffs. Rather, it is placing its bets on trade negotiations and diplomacy. The government is looking to extend interest subsidy schemes and asking banks to give more credit to exporters. Still, analysts aren’t convinced. They wonder whether these policy measures are robust enough to counteract the growing blow of tariffs across labor-intensive industries such as textiles, footwear, and agriculture.
Even though there are official reassurances, uncertainty hangs heavy. The strength of India’s economy will hinge on how rapidly and forcefully these steps bite. Unless help comes early enough, already-stressed sectors could suffer further losses.
The next quarter will be the test. Either India softens the blow and continues growing—or runs the risk of a long slowdown.
