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Tariffs

India Stares Down Crisis as US Tariffs Double, Testing Nation's Ability to Navigate Great-Power Rivalry

Strategic Insights

— 2 min read

India is staring down a crisis that could unravel years of export-led growth and shred millions of jobs. The US is set to double its punitive tariff regime, which already comprises a 25 percent burden on Indian exports, on August 27. The move threatens not only India's traditional trade engines but also high-growth sectors like pharmaceuticals and electronics. The Indian automotive supply chain in Gurugram, the beating heart of India's automotive industry, faces mass closures. The gem and jewelry industry warns that nearly a third of its trade could be wiped out overnight. The US pharmaceutical market, where Indian generics have supplied affordable drugs, has been exempt from tariffs but is at risk of sweeping 150 percent levy.

Key Takeaways:

  • The US is set to double its punitive tariff regime on Indian exports from 25% to 50% on August 27, threatening India's traditional trade engines and high-growth sectors like pharmaceuticals and electronics.
  • The Indian automotive supply chain in Gurugram faces mass closures, and the gem and jewelry industry warns that nearly a third of its trade could be wiped out overnight.
  • The US pharmaceutical market, where Indian generics have supplied affordable drugs, is at risk of a sweeping 150% levy, which could collapse India's pharmaceutical industry.
  • India's integration into global supply chains leaves little room for autarky, making nationalism a difficult path to follow.
  • Behind the nationalist flourish lies the grim reality that India risks losing access to its largest export market and economic powerhouse, the United States, at the very moment when growth is slowing and unemployment is rising.
  • Peter Navarro, Trump's chief trade adviser, accused India of serving as a "clearinghouse" for Russian oil and argued that India should stop buying Russian crude to reduce tensions.

Statistics:

  • Ninety percent of India's trade with the US involves products with no sale tax, according to the International Trade Centre.
  • Indian exports to the US have grown from $23.2 billion in 2004-05 to $85.2 billion in 2017-18.
  • The Indian automotive supply chain in Gurugram employs over 500,000 people, with over 200 small and medium-sized enterprises (SMEs) operating in the sector.
  • The gem and jewelry industry in India exports approximately 20% of its production to the United States.
  • The US pharmaceutical market where Indian generics have supplied affordable drugs worth $15 billion, including electric inverters, battery chargers, transformer parts, PCB assemblies and IT hardware.
  • India's pharma exports to the US were estimated to be worth $10.5 billion in 2019-20.

Sources:

  • Society For Policy Studies, "India Stares Down Crisis as US Tariffs Double, Testing Nation's Ability to Navigate Great-Power Rivalry" (2025)
  • Financial Times, "India is a 'clearinghouse' for Russian oil, says Trump adviser" (Date not specified)
  • International Trade Centre, "India-USA Trade Statistics" (Date not specified)
  • Government of India, "Export Data by Category (2019-20)" (Date not specified)

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