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OPINION AUGUST 08, 2025 | The Indian Eye 12

Strategic Crossroads: What Will be

the Impact of US Tariff Threats and

Geopolitical Penalties on India?

with Moscow. India’s crude oil im- potentially integrate Pakistan into of Indian Textile Industry (CITI)
ports from Russia have surged dra- a U.S.-led energy network, which warns of a “stiff challenge” to its
matically, accounting for approxi- some speculate could eventually exporters’ resilience.
mately 36% of its total oil imports lead to oil exports to India via Is- • Pharmaceuticals: India is the
in FY2024-25 (averaging 1.76 mil- lamabad, further intertwining re- “pharmacy of the world,” supply-
lion barrels per day), up from less gional energy dynamics with geo- ing 40% of the generic demand
than 2% before the Ukraine con- political alignments. in the United States, with the
flict. Russia also remains India’s U.S. accounting for over 30% of
top defense partner, supplying INDIA’S IMMEDIATE India’s total pharma exports. A
over 60% of its foreign military im- ECONOMIC IMPACT AND 25% tariff on these crucial medi-
ports, including critical spare parts STRATEGIC RESPONSES cal supplies could inflate costs for
and jointly developed projects like U.S. consumers and severely im-
the BrahMos missile. he immediate economic re- pact Indian drug manufacturers.
H S PANASER Align India More Closely with percussions for India are • Gems and Jewelry: The Gem
U.S. Geopolitical Aims: Beyond Tsignificant, with a substan- and Jewellery Export Promotion
he recent announcement trade and energy, these actions tial portion of its export earnings Council (GJEPC) has called the
by U.S. President Donald aim to encourage India to align at risk. move “deeply troubling,” noting
TTrump regarding a 25% more closely with U.S. foreign 1. EXPORT SHOCK AND ECONOMIC the U.S. accounts for over $10
tariff on all Indian imports, effec- policy, particularly concerning DOWNTURN: billion of India’s exports in this
tive August 1, 2025, coupled with the Ukraine conflict and broader sector and warning of supply
an unspecified “penalty” related BRICS-related solidarity, which • Vulnerable Sectors: India’s key chain disruption and threats to
to India’s continued energy and the U.S. views as potentially “anti export sectors face steep losses. livelihoods.
defense purchases from Russia, the United States.” Estimates suggest that up to 87% • Electronics and Auto Parts:
marks a significant escalation in The timing of the U.S. energy of India’s export value to the Companies like Apple, which
US-India relations. This aggressive deal with Pakistan, announced just U.S., approximately $66 billion, have shifted iPhone assembly to
stance, further complicated by the hours after the India tariff decla- could be exposed to these tariffs. India to circumvent China tar-
concurrent announcement of a new ration, amplifies the pressure. This • Textiles and Apparel: As the iffs, could see their U.S. sourcing
U.S. energy partnership with Pa- move sends a clear message that U.S. is India’s largest market for strategy “meaningfully set back”
kistan, presents a complex web of the U.S. possesses alternative re- these products, the 25% tariff if tariffs extend to 25%, accord-
strategic, economic, and diplomat- gional partners and energy lever- will make Indian goods signifi- ing to Bloomberg Intelligence.
ic implications for both nations. age, intensifying the diplomatic cantly less competitive com- • GDP Growth Downgrade: In-
and geopolitical stakes for New pared to those from Vietnam dian financial markets reacted
PRESSURE AS LEVERAGE Delhi. The U.S. is seeking to bol- or Indonesia, which enjoy lower sharply, with equities falling and
ster its influence in South Asia and tariff rates. The Confederation the rupee weakening. Econo-
he combined measures ap- mists have revised GDP growth
pear strategically designed forecasts lower, with projec-
Tto exert considerable pres- tions suggesting a potential 40
sure on India. The U.S. aims to: basis points or more reduction
Reduce India’s Trade Barriers: for FY26. Barclays estimates a
President Trump has consistent- 30-basis points reduction for the
ly asserted that India’s tariffs are current fiscal year if tariffs are
“among the highest in the World” implemented.
and its “non-monetary Trade Bar- 2. INDIA’S MEASURED REACTIONS
riers” are “most strenuous and ob-
noxious.” The 25% tariff is a clear AND DIPLOMATIC POSTURE:
attempt to force India to open its • Commitment to Dialogue: In-
markets more broadly, particularly dia’s official statement has re-
in agriculture and dairy, where In- affirmed its commitment to di-
dia has maintained firm protective alogue and a “fair, balanced,
stances. and mutually beneficial” trade
Shift Away from Russian De- deal, while pledging to prioritize
pendencies: The “penalty” for en- and protect the interests of its
ergy and defense purchases from farmers, MSMEs, and domestic
Russia directly targets a core tenet India’s consistent diplomatic engagement and firm stance on safeguarding strategic autono- industry. Commerce Minister
of India’s foreign policy – its his- my demonstrate its capacity to maneuver (ANI) Piyush Goyal has emphasized
torical and strategic relationship Continued on next page... >>

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