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Amid Tariff Row, India Set to Seal $1 Billion Fighter Jet Engine Deal with US Firm
YUGVARTA NEWS
YUGVARTA NEWS
Lucknow, 27 Aug, 2025 08:55 AM
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Amid Tariff Row, India Set to Seal $1 Billion Fighter Jet Engine Deal with US Firm
New Delhi, August 27, 2025 — Indian exporters are bracing for one of the harshest trade actions in recent years as the United States has imposed a 50 per cent tariff on a wide range of goods from India, effective today. This includes an additional 25 per cent duty announced as retaliation for New Delhi’s continued purchase of Russian crude oil and military equipment, doubling the existing 25 per cent tariff already in place. According to estimates by the Global Trade Research Initiative (GTRI), nearly two-thirds of India’s exports to the US — worth close to $60 billion — will now fall under the new tariff net. This sharp increase is expected to erode India’s competitiveness in American markets, hitting labour-intensive sectors and threatening jobs across small and medium enterprises. Double-Edged Dilemma Former ICAI President Ved Jain explained the difficult choice confronting India. “If we stop importing Russian oil, our economy becomes inefficient and suffers. On the other hand, if we continue buying Russian oil, we remain efficient but must bear the consequences in the form of export challenges. It is a choice between two evils,” he said. India’s reliance on discounted Russian oil has been a cornerstone of its energy strategy, but it has also drawn Washington’s ire, leading to this steep tariff escalation. Industries Under Pressure The hardest-hit sectors include textiles, gems and jewellery, carpets, furniture, and seafood exports such as shrimp. These industries employ millions of workers, particularly in small and medium-sized businesses that operate on thin margins. Textile exporter Bhadresh Dodhia highlighted the near-impossible burden on his industry. “To absorb such a heavy tariff increase is a non-starter. The whole supply chain works on wafer-thin margins. Importers will not take the hit, and eventually, consumers will pay more. But in the short term, we are just waiting for a miracle,” he said. The fallout could translate into widespread job losses, especially in states like Gujarat, Tamil Nadu, and West Bengal, which depend heavily on export-driven employment. Ripple Effect on the US Analysts warn that the US may also face unintended economic consequences. Economist SP Sharma noted that higher tariffs would likely fuel inflation in the US, where inflation rates are already above 2 per cent. “This move is unlikely to benefit the US economy. Instead, it risks slowing growth further. During Trump’s earlier tenure, the US economy grew at just 1.4 per cent. Repeating such high tariffs could again lead to stagnation,” he cautioned. Rising prices for American consumers, particularly in sectors like clothing, furniture, and jewellery, could reduce demand and dampen growth. Trade Shrinkage Ahead India’s exports to the US, currently valued at $86.5 billion, are projected to shrink to $49.6 billion by FY26 under the new tariff regime. While about 30 per cent of exports will remain duty-free and 4 per cent will attract a 25 per cent duty, nearly 66 per cent — amounting to $60.2 billion — will be subject to the steep 50 per cent tariff. Winners and Losers The immediate beneficiaries are competitors such as China, Vietnam, Mexico, and Turkey, which are well positioned to capture India’s lost market share. With the US accounting for 18 per cent of India’s total goods exports, the ripple effect is set to cause significant disruption in India’s economy, putting growth, jobs, and investment at risk. For now, Indian exporters and policymakers are watching closely, hoping for a breakthrough in negotiations that could ease the pressure. But unless the tariffs are rolled back, the world’s two largest democracies may be headed for one of their most serious trade disputes in decades. US Tariffs Hit India Hard From today, Indian exports to the US face a 50% tariff, doubling the earlier duty. Nearly $60 billion worth of goods textiles, gems, shrimp, carpets, furniture are caught in the net, risking job losses, export shrinkage, and slower growth. Experts warn the move could also backfire on the US, fuelling inflation and raising consumer prices. Competitors like China, Vietnam, and Mexico are set to gain