The recent imposition of a 25% tariff on Indian exports by US President Donald Trump is unlikely to cause significant economic disruption, according to a senior Indian government official. While acknowledging that the development is being closely monitored, the official stated that the overall impact on exports and GDP would be minimal, with sectors like agriculture, dairy, and MSMEs expected to remain largely unaffected. The official emphasized that the worst-case scenario may result in a GDP loss of less than 0.2%, a margin considered manageable by the government.
The official also reaffirmed India's uncompromising stance on protecting its farmers' interests, making it clear that the country will not allow the import of genetically modified crops or relax restrictions on products that touch upon religious sensitivities, such as non-vegetarian milk and beef. These issues, the source said, are not just about trade but involve deeper concerns of food safety and public sentiment.
In terms of export impact, the official noted that most Indian goods shipped to the US do not fall under the new tariff category, and therefore, any dip in export volume would likely be marginal and concentrated in a few specific sectors. The broader trade flow between the two nations is expected to continue without major disruption.
Meanwhile, India is pursuing a bilateral trade agreement (BTA) with the United States, which could pave the way for a reassessment of the tariff regime and ease ongoing trade tensions. The official expressed confidence in the progress of these negotiations and reiterated that India remains firm on safeguarding its national and sectoral interests throughout the process.
In summary, while the new US tariffs are a concern, the Indian government does not foresee significant economic damage and is committed to protecting key domestic industries and religious sensitivities, all while maintaining strong diplomatic and trade channels with the US.
