The PHD Chamber of Commerce and Industry (PHDCCI) has recently released a comprehensive white paper analyzing the anticipated effects of the newly introduced 25% tariff by the United States on Indian exports. According to the findings, the overall economic repercussions for India are expected to be minimal. The study estimates that the new trade barrier will only lead to a 1.87% decline in India’s exports and an even smaller 0.19% reduction in the country’s Gross Domestic Product (GDP). These figures indicate that the macroeconomic impact of the tariff is limited, despite the considerable attention the policy has drawn.
The Chamber's detailed analysis revolves around how the tariff—effective from August 7, 2025—will influence bilateral trade between India and the United States. It estimates that goods worth approximately $8.1 billion, out of India’s total exports to the U.S. during the financial year 2024–25 (FY25), will be affected by this tariff. While the number may seem substantial in absolute terms, when viewed in the context of India’s total trade with global partners, the actual disruption is comparatively insignificant.
PHDCCI President Hemant Jain emphasized that India’s economy remains strong and resilient. He pointed out that even with this new tariff policy, India continues to maintain its position as one of the fastest-growing economies among major global nations. He reassured stakeholders that the impact on GDP would be virtually negligible and that the implications for exports, although noticeable, would not be deeply damaging to the broader economy.
The estimates provided in the white paper are based on India’s export figures to the United States, which totaled around $86.5 billion in FY25. The report draws on multiple data sources, including statistics from India’s Ministry of Commerce and industry-related reports, and aligns its conclusions with global economic projections such as those issued by the International Monetary Fund (IMF). This alignment adds further credibility to the chamber’s projections.
Despite the minimal impact on the broader economy, the white paper does identify specific sectors that are likely to face challenges as a result of the new tariff. These sectors include engineering goods, which may experience a loss of $1.8 billion in exports, and electronic goods, which could face a decline of $1.4 billion. Other vulnerable industries highlighted include pharmaceuticals, with a potential reduction of $986 million, gems and jewellery at $932 million, and ready-made garments estimated to decline by $500 million. These sectors are expected to feel pricing pressures and could face temporary losses in market share, especially in the short term.
The PHDCCI, however, remains optimistic that these sector-specific setbacks can be mitigated through timely and strategic policy interventions. They recommend targeted support for the affected industries and encourage exporters to diversify both their product offerings and their markets. This proactive approach, the Chamber believes, will help ease short-term difficulties and position India’s exporters for long-term growth.
The United States continues to be India’s largest export market, accounting for nearly 18% of India’s total outbound shipments during FY25, according to data from the Ministry of Commerce and Industry. This strong trade relationship underscores the importance of maintaining and strengthening bilateral economic ties. Nonetheless, the PHDCCI notes that India’s diversified export base helps cushion the blow from country-specific policy changes such as this tariff.
In response to the challenge, the PHDCCI has proposed a four-pronged strategic approach to minimize the impact of the US tariff and enhance India’s export competitiveness. First, the Chamber suggests deepening market penetration within the United States. This includes negotiating bundled pricing with large American retailers like Walmart, Target, and Amazon, as well as tapping into the Indian diaspora and forging long-term supply contracts to maintain steady demand.
Secondly, the report encourages Indian exporters to collaborate directly with American buyers to co-create products. One recommendation is to develop premium sub-brands under the "Make in India Select" initiative. This strategy would help Indian products compete in the higher-end segment of the US retail market, improving both perception and market share.
The third recommendation involves geographical diversification. The report emphasizes the need to redirect exports toward other promising regions such as the European Union, Canada, Latin America, and various Asian countries. Additionally, India is advised to make greater use of existing Free Trade Agreements (FTAs), including those with the UK and ASEAN nations, to facilitate smoother entry into new markets and reduce reliance on the US.
The fourth and final strategic response calls for diversification not only in export destinations but also in manufacturing and service capabilities. The PHDCCI recommends establishing joint ventures in the United States to produce goods domestically, deploying agri-tech solutions in American farming regions, and developing service hubs to provide integrated support for exported goods and related services. These moves would reduce dependence on exports alone and build more resilient business models.
India’s overall economic indicators continue to show robust performance, despite the short-term challenge posed by the US tariffs. According to the IMF’s July 2025 World Economic Outlook update, India’s GDP is expected to grow by 6.4% in the 2025–26 fiscal year—making it the fastest-growing major economy globally. Additionally, sectors like electronics have experienced strong momentum, posting a remarkable 50.7% compound annual growth rate (CAGR) between FY2020 and FY2025. The agri-food sector, too, has shown consistent double-digit growth, reflecting rising global demand for Indian produce.
Dr. Ranjeet Mehta, the Chief Executive Officer and Secretary General of PHDCCI, echoed the report’s central message by affirming that while the 25% tariff is a notable policy shift, it is not a crisis. India’s strong domestic demand, dynamic economy, and expanding trade network provide ample resilience to absorb such external shocks. He further emphasized that the current situation offers an opportunity to accelerate ongoing reforms and pursue greater market diversification and value addition.
In conclusion, the PHDCCI’s white paper conveys a cautiously optimistic outlook. While acknowledging the seriousness of the tariff and its potential sectoral disruptions, the report stresses that India’s broader economic stability remains intact. The Chamber urges stakeholders to view this moment as a chance to push forward with reforms that will improve India’s global trade positioning. The full report, titled "Assessing the Impact of the US Tariff on Indian Exports and Strategic Response Roadmap", is available for public access on the official website of the PHD Chamber of Commerce and Industry.
