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India Today
27 minutes ago
- India Today
US tariff surge could stall India's manufacturing momentum, warns Moody's
India's goal to become a global manufacturing powerhouse could take a hit, thanks to a sharp rise in tariffs from the US. A recent report by Moody's Ratings has warned that the recent decision by the US to double tariffs on Indian exports may reduce India's competitiveness, especially in the electronics Thursday, US President Donald Trump signed an Executive Order that adds a 25% tariff on Indian goods. This move comes in response to India's continued import of oil from Russia, which Washington sees as going against efforts to isolate Moscow over the Ukraine war. The new tariffs will apply to goods imported into the US 21 days after the order was says the wide tariff gap between India and other Asia-Pacific countries could hurt India's recent progress in attracting global manufacturers. This could slow the country's manufacturing growth and weaken its position in the global supply chain. India's annual GDP growth may slow by about 0.3 percentage points, Moody's warned, with Goldman Sachs offering a similar ratings agency added that if the issue isn't resolved quickly, India's annual GDP growth may slow by about 0.3 percentage points, with Goldman Sachs offering a similar real worry, however, lies in the long-term impact. India could lose its manufacturing momentum just when it has started gaining attention as an alternative to China. The tariff hike could push global companies to look at other countries in the region for setting up their factories and supply tariffs may have long-term effects, possibly weakening India's position in global manufacturing. This calls for strong diplomatic and economic moves to reduce the damage and protect future now, all eyes are on how India adjusts its trade policies to tackle the challenge.(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)- EndsTune InMust Watch
Hindustan Times
27 minutes ago
- Hindustan Times
India's GDP could slow down to 6 pc in FY26 if US levies 50 pc tariff: Moody's
Moody's Ratings on Friday said India's GDP growth is likely to slow down by about 30 basis points to 6 per cent in the current fiscal if the US implements 50 per cent tariffs from August 27. On August 6, the US announced an additional 25 per cent tariff on all Indian imports. (Shutterstock) However, resilient domestic demand and the strength of the services sector will mitigate the strain on India, Moody's said, adding that India's response to high US tariffs will ultimately determine the effect on its growth, inflation and external position. On August 6, the US announced an additional 25 per cent tariff on all Indian imports, in addition to an existing 25 per cent duty, taking the total duty to 50 per cent effective August 27. The White House said the measure responds to India's continued purchase of Russian oil. "Should India continue to procure Russian oil at the expense of the headline 50 per cent tariff rate on goods it ships to the US, which is currently its largest export destination, we project that real GDP growth may slow by around 0.3 percentage points compared with our current forecast of 6.3 per cent growth for fiscal 2025-26 (ending March 2026)," Moody's said. The 50 per cent tariff on India compares with the 15-20 per cent duty for other Asia-Pacific countries. India and the US have been negotiating a bilateral trade agreement (BTA) since March, with an aim to more than double the bilateral trade in goods and services to USD 500 billion by 2030 from the current USD 191 billion. So far, five rounds of talks have been completed. For the sixth round, the US team is visiting India from August 25. They are aiming to conclude the first phase of the agreement by fall (October-November) this year. The two sides are also looking at an interim trade deal before the BTA. Moody's said countries in Asia-Pacific are vying for a greater share of trade and investment flows amid a restructuring of supply chains triggered by US policy shifts. "Beyond 2025, the much wider tariff gap compared with other Asia-Pacific countries would severely curtail India's ambitions to develop its manufacturing sector, particularly in higher value-added sectors, such as electronics, and may even reverse some of the gains made in recent years in attracting related investments," Moody's said. Since 2022, India has increasingly ramped up its crude oil imports from Russia as demand from the latter's traditional offtakers dried up amid sanctions tied to its invasion of Ukraine. "India has been able to procure at least some of its purchases of Russian oil at below global prices, which has helped insulate India's inflation from the pass-through of global commodity price movements, while preempting pressures on its current account deficit," Moody's said. India's imports of Russian crude rose to USD 56.8 billion in 2024 from USD 2.8 billion in 2021. Moody's said India retains sufficient foreign-reserve currency buffers to weather external volatility. "The magnitude of the drag on growth from tariff obstacles will influence the government's decision to pursue a fiscal policy response, although we anticipate the government will adhere to its focus on gradual fiscal and debt consolidation," said the US-based rating agency.
Hindustan Times
27 minutes ago
- Hindustan Times
US senator slams Trump's 50% tariffs on India: 'Risks years of work into building ties'
US President Donald Trump hiking up tariffs on Indian imports to 50 per cent has not gone down well with senator Gregory Meeks, who said the move puts the relationship that New Delhi and Washington have fostered over the years at risk. FILE PHOTO: President Donald Trump and Prime Minister Narendra Modi shake hands(REUTERS) Reacting to the tariff move, the Democrat said on Friday, "Trump's latest tariff tantrum risks years of careful work to build a stronger US-India partnership." He also described the India-US relationship as "strategic, economic, and people-to-people", urging that any concerns be addressed in "a mutually respectful way consistent with our democratic values." Donald Trump announced 25 per cent tariffs for India last week, calling New Delhi's tariffs "far too high", and also criticised India buying military equipment and energy from Russia. Days later, Trump intensified the tariff attack with additional 25 per cent tariffs, hiking to total duties to 50 per cent. The secondary sanctions were owed to India's business with Russia. In response, New Delhi called the move "unfair, unjustified and unreasonable", and pointed that only India was being targeted for actions several other countries were also taking. When asked why he hadn't slapped similar sanctions on China, another key buyer of Russian oil, Trump did not give a definite answer, only saying that more secondary sanctions were incoming. In a separate remark Trump had said it "could happen" when asked about the possibility of India-like additional tariffs for China. Half of Trump's announced tariffs have come into force, and the remaining 25 per cent will take effect on August 27. With all eyes on the future of the India-US trade partnership, Trump has ruled out the possibility of any negotiations with India to that effect until the tariff issue is resolved. 'No, not until we get it resolved,' Trump said in the Oval Office in response to a question on whether he expects increased trade negotiations with India.
