India’s Resilience on Display – Trump Tariffs Have Negligible Effect: PHDCCI

New Delhi, August 6, 2025: The PHD Chamber of Commerce and Industry (PHDCCI) released a comprehensive white paper analyzing the impact of the United States' 25% tariff on Indian imports, effective August 7, 2025. The study reveals that while the tariff will affect approximately $8.1 billion worth of India's exports to the US, the overall impact on India's economy remains manageable.

India continues to be the fasted growing economy amongst the major economies of the world. Our analysis indicates that there will be estimated impact of only 1.87% on India's total global merchandise exports and negligible 0.19% on India’s GDP as a result of 25% tariff announced by US on India, said Mr. Hemant Jain, President, PHDCCI.

Key Highlights

Economic Impact Assessment:

·         Total potential export impact estimated at $8.1 billion based on FY2025 merchandise exports of $86.5 billion

·         Impact represents only 1.87% of India's total global merchandise exports

·         GDP impact projected at a negligible 0.19%

·         India continues to be the fastest-growing major economy at 6.4% GDP growth (IMF July 2025 forecast) in the world

Sectoral Impact Analysis

The analysis identifies the potential impact on the following sectors:

·         Engineering Goods: $1.8 billion

·         Electronic Goods: $1.4 billion

·         Pharmaceuticals: $986 million

·         Gems & Jewelry: $932 million

·         Ready-made Garments: $500 million

Strategic Response Framework

PHDCCI recommends a four-pronged strategy:

1. Market Penetration

·         Negotiate bundled pricing with major US retailers (Walmart, Target, Amazon)

·         Leverage Indian diaspora networks for market access

·         Secure long-term offtake agreements to stabilize demand

2. Product Development

·         Develop premium variants of export lines with higher value acceptance

·         Co-innovate with US buyers on custom specifications

·         Launch "Make in India Select" premium sub-brands

3. Market Development

·         Redirect volumes to EU (15% tariff), Canada (20% tariff), Latin America (10% average)

·         Fast-track FTA utilization (India-UK, India-ASEAN)

·         Employ "China-plus-one" positioning in Asian markets

4. Diversification

·         Establish joint ventures for on-shore US production

·         Deploy agri-tech solutions in US specialty crop regions

·         Establish integrated service-product capability centers

India's Growth Trajectory Remains Intact

Despite tariff headwinds, India's economic fundamentals remain strong:

·         IMF projects 6.4% GDP growth for 2025-26, highest among major economies

·         Electronics exports surged 50.7% CAGR (FY2020-25), demonstrating manufacturing competitiveness

·         Agri-food segments showing double-digit growth reflecting rising global demand

Hemant Jain, President, PHDCCI, noted: "The tariff challenge accelerates India's need for export sophistication and geographic diversification. Our strategy framework provides a roadmap for converting this disruption into an opportunity for long-term competitiveness enhancement."

Dr. Ranjeet Mehta, CEO & SG, PHDCCI, stated: "While the 25% US tariff presents challenges, India's robust domestic demand and diversified economy provide resilience. Our analysis shows the impact, though significant in absolute terms, remains manageable at the macro level. This presents an opportunity for Indian businesses to accelerate market diversification and value addition strategies.