Moody’s says Trump 50% tariffs ‘severely undermine’ India manufacturing ambitions:
By Anjali Sharma
WASHINGTON – Moody’s Ratings on Sunday said the 50 per cent tariffs on Indian imports by US President Donald Trump could severely undermine India’s manufacturing ambitions and slow economic growth.
“Beyond 2025, the much wider tariff gap compared with other Asia-Pacific countries would severely curtail India’s ambitions to develop its manufacturing sector, particularly in higher value-added sectors such as electronics, and may even reverse some of the gains made in recent years in attracting related investments,” it said.
According to Moody’s Ratings, India’s strong domestic demand and the robust performance of its services sector will help cushion the economic impact of steep new US tariffs imposed as a penalty for continued imports of Russian crude oil.
On Russian oil imports, Moody’s said reducing Russian oil imports to avoid penalty tariffs could also make it harder for India to secure alternative crude supplies in sufficient quantities.
India has sharply increased imports of Russian crude since 2022, taking advantage of discounted rates as traditional buyers retreated following Moscow’s invasion of Ukraine.
Russian oil accounted for 35.5 per cent of India’s total crude imports in 2024, up from just 2.2 per cent in 2021, with the import bill surging to USD 56.8 billion from USD 2.8 billion over the same period.
Moody’s also said India’s real GDP growth may slow by around 0.3 percentage points from its current forecast of 6.3 per cent for the fiscal year ending March 2026.
Trump signed an executive order slapping an additional 25% penalty tariff on Indian goods. This is on top of the 25 per cent reciprocal tariff announced earlier, effectively doubling the tariff rate on Indian exports to the US, its largest export market.
