Global ratings agency Moody’s Ratings has warned that the 50% tariffs imposed by US President Donald Trump on Indian imports could significantly hurt India’s economy. The agency said that this move creates a much wider tariff gap compared to other Asia-Pacific countries, putting India at a disadvantage in global trade.
Impact on Manufacturing
Moody’s noted that the higher tariffs could seriously damage India’s ambition to become a global manufacturing hub. The gap between India’s tariff rates and those of other Asia-Pacific nations may even undo some of the progress India has made in recent years in attracting manufacturing investments.
GDP Growth Concerns
If India continues to import Russian oil while facing the 50% US tariffs on its goods, GDP growth could slow by 0.3 percentage points compared to Moody’s current forecast of 6.3% for FY25–26.
Oil Import Challenges
Moody’s added that reducing Russian oil imports to avoid the penalty tariffs could be difficult for India. Finding alternative crude oil sources in sufficient quantities and on time may pose serious challenges for the country’s energy security.
Inflation Risks
The agency also highlighted that higher tariffs could increase inflation risks for India, as costlier imports might lead to higher prices for goods and raw materials.
Source: Moody’s Ratings, August 2025
Nomura Flags Higher Risk to India’s Growth from New US Tariffs
Nomura analysts have warned that the U.S. decision to impose an additional 25% tariff on Indian imports, starting in 21 days, could sharply raise short-term risks to India’s economic growth. This move will double the total tariff on Indian goods to 50%, a level Nomura says could feel like a trade ban and cause serious disruption to exports.
Previously, Nomura had estimated that the tariffs might shave 0.2% off India’s FY 2026 GDP growth, which is currently projected at 6.2%. Now, the firm cautions that the impact could be even greater, depending on how long the higher tariffs stay in place.
