Barclays has marked ‘serious threat’ for around 70% of India export to the US with the 50% rates of the Donald Trump government that are taking effect today. “The risks for growth for the Indian economy have become more real,” says Barclays in his latest report.The relationship status has evolved considerably from being a “good friend” to becoming a “bad trading partner,” says it.Barclays notes that the 50% import duties are approaching the India considerably compared to other countries of emerging market. Apart from Brazil, where the 50% rates were imposed for reasons that go beyond trading balances, other developing countries are considerably lowered tasks. However, the exposure of India to GDP remains modest because of the predominantly domestic economy.
American import of Indian good see enormous tariff increase
- The United States, which are the primary trading partner of India, receives 18% of the total export of merchandise in India in 2024.
- The merchandise export of $ 80 billion to America (Cy2024 figures) includes the most important export sectors of India. Currently, with exclusions that are assigned to smartphones, petroleum products and pharmaceutical products, about $ 55 billion in exports (which represents 70% of American exports and 13% of the total merchandise export of India) susceptible to the increased 50% rate, says Barclays.
- The sectors that are most affected by raised American rates, compared to the rates during the beginning of the year, are electrical machines and gems and jewelry.
- Although certain electronic items, mainly semiconductors, receive exemptions, these are not significantly for the benefit of the primary export categories of India. The smartphone exemption offers substantial lighting, in particular given its success within the Pli scheme of India. The pharmaceutical sector, the third largest export from India to the US ($ 8.7 billion in 2024), is currently enjoying exemption. President Trump, however, has indicated plans for individual rates up to 200% with a respite period of 12-18 months for all trading partners. This substantial increase would significantly influence the pharmaceutical industry of India, because the US buys 38% of India’s pharmaceutical exports.
India-US rate difference is increasing
- The clothing sector stands for significant challenges in maintaining competitiveness, with a combined rate of 60% (50% plus existing rate) that is remarkably higher than those at regional competitors (“mutual” rates for Bangladesh and Sri Lanka remain 20%).
- The implementation of higher rates (2 April) and the subsequent break led to an increase in Asian export to the US. The export from India to the US initially showed remarkable growth (28.1% J/J in March compared to 6.5% average growth in CY2024), which maintained strong performance until July (20.1% J/Y). While the American shipments continue to register with double -digit growth, exports to other destinations (except China) shows falling trends. After the robust first half, a delay is expected in H2.
India’s Top 10 Export to the US is confronted with a significant increase in rates
India-Russia crude oil trade
India’s purchasing of Russian oil stands for a secondary rate of 25%, but it continues its purchases. The economic advantage of Russian import in 2022-24 remains the primary justification of India.The Russian contribution to the total import of Mineral Fuel in India has risen considerably from 2.7% in FY21-22 to 26% in FY24-25 (calculated in USD), so that traditional leaders Iraq and Saudi Arabia were overtaken.
Russia has remained the best supplier of mineral fuel for India
The Russian crude oil discount with a discount has generated an estimated savings of $ 7-10 billion for a total spending for oil import of $ 186 billion in 2024.Russian oil prices currently offer a modest advantage of $ 3-8/BBL compared to varieties from the Middle East. Although Indian refineries indicate plans to reduce Russian oil acquisitions in the coming weeks, full stop is not expected, says Barclays.Read also | ‘Country First, Commerce later’: Indian refineries will probably not stop the crude oil trade in Russia under American pressure; “Government’s message is …”Russia maintained its 26% share in the import of mineral fuel in India during Q1 FY26 (April-June). Liver diversification shows increased American participation, with 9.8% of the total import of India, an increase of 6.6% in FY24-25 (with 39% annual base growth). If India shifts to traditional West Asian suppliers and emerging sources such as Brazil to compensate for reduced Russian supplies, prices can rise by around $ 4-5/barrel.With 2025 global oil prices of an average of $ 9/bbl lower than 2024 levels, it is unlikely that such a diversification of the delivery will have a significant influence on the import costs of India, the report says.
India is preparing to tackle Trump’s rates
India is developing strategies to strengthen its economy and support exporters in response to the standstill in trade negotiations with the United States and their imposed import rates.Prime Minister Narendra Modi’s announcement with regard to GST rate reductions and tax board restructuring are aimed at stimulating urban consumption. For exporters and MSMEs, the government is considering reactivating the Emergency Credit Line Guarantantresis (ECLGS), which offers the government-supported collateral working capital, which was previously used during the COVID pandemie.Various sectors face considerable challenges of the 50% American rate, in particular labor -intensive industries such as clothing, gems and jewelry, shoes and leather, which are highly dependent on American markets (consisting of more than 30% of their exports). Industrial associations have requested improved support through interest rate subventions, loan repossance moratoriums and increased refunds from Rodtep Duty. The government is also considering an extension of the five -year -old Rosctl for the clothing sector to compensate for the embedded state and central taxes on exports, says the report.Read also | How can India compensate for the impact of Donald Trump’s rates? ‘Two broad options’ to absorb shocks – explainedThe strategy of India includes the diversification of its export markets outside of American dependence through free trade agreements (FTAs). Currently, under the top ten export products from India, which form 72% of total exports, the US leads in eight categories. China dominates the export of agriculture, while the Netherlands leads in petroleum products. Given the higher tariff structure of India compared to peer economies, market diversification seems crucial. The United Arab Emirates rank as the second largest destination for various raw materials, including electrical machines, precious stones and jewelry and iron and steel. Likewise, the UK holds the second position for pharmaceutical and clothing exports. India has set up trade agreements with both the VAE and the United Kingdom, while he follows FTA discussions with various other countries, including the EU, Chile, Peru, Nieuw -Zeeland and Oman.
Outlook in India-us Handelsdeal
Barclays notes that bilateral discussions are expected to continue, with crucial meetings planned during the September visit of PM Modi at the UN -general meeting and the October visit of President Trump to India for the Quad Summit. These high -level assignments offer opportunities for trade negotiations, hoping to reach lower rates rates than the current 50%.
American largest export market for India
The Indian agricultural sector remains a crucial limit in trade negotiations, mainly because of the cooperative structure and ethical considerations. The position of India with regard to genetically modified products and American dairy products derived from animal feed remains clear. However, India has shown that bilateral trade is being improved by alternative means, especially during the American visit of Premier Modi in February 2025, aimed at Defense acquisitions and energy import, says Barclays.
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