US tariffs pose a big challenge to India's economy! Every sector will be deeply affected

US tariffs have become the biggest hurdle for India's economy. Due to this, not only manufacturing will be affected, but its impact is being felt on every sector from export. Rating agency Moody's on Friday warned that if the US imposes a total of 50 per cent import duty on Indian exports from August 27, India's economic growth rate will fall to 6 per cent in the fiscal year 2025-26. The projection is 0.3 percentage points lower than the current forecast of 6.3 per cent growth for the current financial year.
However, the rating agency said India's strong domestic demand and the strength of the services sector will be able to mitigate the US tariff pressure to some extent. Moody's said India's response to higher US tariffs will determine the impact on India's economic growth, inflation and external position. US President Donald Trump had on August 6 announced an additional 25 per cent tariff on Indian imports. With this, the total duty on Indian products will increase to 50 percent from August 27.
Moody's said the 50 per cent tariffs imposed on Indian imports are much higher than the 15-20 per cent tariffs imposed on other countries in the Asia-Pacific region. In the long run, this could impact growth plans for India's manufacturing sector, especially value-added sectors such as electronics. The agency also said that India has enough foreign exchange reserves to deal with external volatility and the government will likely maintain its focus on fiscal and debt control gradually. Moody's said that since 2022, India has imported cheaper crude oil from Russia, which has helped it reduce pressure on inflation and the current account deficit. India's oil imports from Russia rose to $56.8 bn in 2024, compared to only .8 bn in 2021.