The Indian government's economic policy of “Atmanirbhar Bharat“ (“Independent India“) may face difficulties due to the introduction of 50% import duties on Indian goods from the US, international rating agency Moody's said.
Higher US tariffs could undermine the competitiveness of India's manufacturing sector, especially in electronics, and slow GDP growth by 0.3 percentage points in the current financial year 2025-2026 from the projected 6.3%. “The increase in US tariffs on India will lead to a wider gap in US tariffs compared to other countries in the Indo-Pacific region, which could seriously limit New Delhi's ambition to develop its manufacturing sector, especially in higher value-added industries such as electronics“, the agency said in a statement.
Moody's does not rule out that prolonged tariff frictions between India and the US will weaken the competitiveness of Indian exports and could slow investment in key industrial sectors, which would hinder the implementation of the Atmanirbhar Bharat strategy. “At the same time, India has sufficient foreign exchange reserves to minimize the difficulties caused by external factors and is expected to be able to maintain its status as the fastest growing economy in the world“, the agency noted.
The Atmanirbhar Bharat strategy, announced by the Indian government in 2020, is aimed at stimulating domestic production and reducing the level of external dependence of 14 national industries.
The US administration has imposed additional duties of 25% on India in connection with its purchase of Russian oil. Along with the earlier decision of the United States to impose a 25% duty on Indian goods, the tariff for the South Asian republic will now be 50%.
US President Donald Trump said that India “has always bought most of its military equipment from Russia“ and is “along with China, the largest buyer“ of Russian energy resources. The Indian Foreign Ministry called the attacks by the US and the EU on the import of Russian oil unjustified, since Western countries have previously encouraged such trade and they themselves continue to buy goods and services from the Russian Federation. As the Indian Foreign Ministry stressed, “it is extremely unfortunate that the US has decided to impose additional duties on India for actions that a number of other countries are also taking in their national interests“. These actions by the US are unfounded and unreasonable and India will take all necessary measures to protect its national interests, the Ministry of Foreign Affairs of the South Asian republic said.