NewsGlobalUS Tariffs Could Slash India's Exports by $35 Billion, Government Unveils 10-Point Recovery StrategyUS Tariffs Could Slash India's Exports by $35 Billion, Government Unveils 10-Point Recovery Strategy
The US has imposed tariffs of up to 50% on Indian goods, affecting about 55% of India's $87.30 billion merchandise exports to the US. This could potentially eliminate $30-35 billion in overseas sales and reduce GDP growth. In response, India has proposed a 10-point recovery plan including export diversification, infrastructure development, and regulatory reforms. The plan also aims to expand Global Capability Centres from 1,700 to 2,100-2,200 by 2030. Foreign portfolio investors have already withdrawn $2 billion from Indian equities in August.
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The United States has imposed significant tariffs on Indian goods, potentially reaching up to 50% and affecting approximately 55% of India's $87.30 billion merchandise exports to the US. This move has prompted the Indian government to propose a comprehensive 10-point recovery plan to mitigate the economic impact.
Impact on Key Sectors
The newly imposed tariffs target core sectors of the Indian economy, including:
- Textiles
- Gems and jewellery
- Marine products
- Auto components
- Agriculture
Economic Implications
Studies suggest that these export levies could have far-reaching consequences for India's economy:
- Potential elimination of $30.00-35.00 billion in overseas sales
- GDP growth reduction by nearly one percentage point
- Downward revision of FY26 growth forecasts by 30 basis points
- Additional economic drag of 0.20-0.50% possible
Foreign Investment Concerns
The tariff situation has already begun to impact foreign investments:
- Foreign portfolio investors withdrew $2.00 billion from Indian equities in August
- This follows $2.00 billion outflows in July
Government's 10-Point Recovery Strategy
To counter these challenges, the Indian government has proposed a comprehensive 10-point strategy:
- Geographical export diversification focusing on Africa and West Asia
- Transport infrastructure development to reduce logistics costs from 8-9% of GDP
- Tourism infrastructure enhancement
- Regulatory reforms to attract foreign investment
- Agricultural law reforms
- Land and labour law modernization
- Tax simplification through GST restructuring and the new Income Tax Bill 2025
- Strategic asset divestment
- Leveraging the record $136.00 billion in remittances
- Expanding Global Capability Centres
Global Capability Centres Expansion
The strategy includes a focus on Global Capability Centres (GCCs):
| Current GCCs | Projected GCCs by 2030 |
|---|---|
| 1,700 | 2,100-2,200 |
This multi-faceted approach aims to diversify India's export markets, improve infrastructure, attract foreign investment, and streamline regulations to help the economy weather the impact of US tariffs and maintain growth momentum.
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