India exported USD 86.5 billion worth of goods to the US in FY25, with nearly 55 percent of that at risk from the tariffs.
Published: August 14, 2025 2:42 PM IST
US President Donald Trump has imposed steep tariffs on Indian imports, leaving many Indian exporters disappointed. However, S&P Global Ratings Director YeeFarn Phua says this will not affect India’s economic growth, and the country’s sovereign rating outlook will remain positive. The US has introduced these tariffs as a penalty for India’s oil purchases from Russia. A total tariff of 50 per cent has been announced with 25 per cent already took effect on August 7, and the remaining 25 per cent will be applied from August 28.
Experts believe India’s economy can easily handle this impact. Speaking during a webinar on Asia-Pacific sovereign ratings on Wednesday, Phua explained that India’s economy is not heavily dependent on trade. Exports to the US account for only about 2 per cent of India’s GDP, so these tariffs are unlikely to slow down the country’s growth.
Why India won’t be affected by Trump’s tariff
Last May, S&P gave India’s sovereign rating of BBB- a positive outlook, mainly because of the country’s strong economic growth.
According to S&P’s latest forecast, India’s GDP is expected to grow by 6.5 per cent in the current financial year which is also about the same as last year. Phua also pointed out that major export sectors like pharmaceuticals and consumer electronics have been exempted from these tariffs.
“In the long run, we don’t think these tariffs will be a major shock for India’s economy. That’s why the country’s positive outlook will remain,” he said.
No impact on investments by US tariffs
When asked if the US tariffs would affect investments in India, Phua said that under the “China Plus One” strategy, companies have been expanding their operations in India for the past few years. Most of them are here to meet India’s large domestic demand, not just to export to the US.
“Many companies are investing in India because the middle class here is growing quickly. For them, the US market is not the only target,” Phua explained.
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