President Donald Trump’s proposed 50% tariffs on Indian imports could significantly hinder India’s manufacturing aspirations and impede economic growth, according to a Moody’s Ratings report.
The 50% tariffs that President Donald Trump has proposed imposing on Indian imports are likely to have a substantial impact on India, according to Moody’s Ratings. The organization warned that these measures could greatly impair India’s efforts to bolster its manufacturing sector, as well as slow down the country’s economic growth.
Moody’s indicated that India’s real GDP growth may decrease by approximately 0.3 percentage points from the current forecast of 6.3% for the fiscal year ending March 2026. This potential decline is attributed to the significant increase in tariffs, which could make India less competitive compared to other countries in the Asia-Pacific region.
Beyond 2025, Moody’s projects that the wider tariff gap—especially when compared to other countries in the Asia-Pacific—would greatly restrict India’s manufacturing ambitions. This is particularly concerning for the higher value-added sectors such as electronics, which have seen notable investment interest in recent years.
The report also highlighted the issues surrounding India’s energy supply. Reducing imports of Russian oil to avoid penalty tariffs could put pressure on India to find alternative crude supplies, which might not be available in sufficient quantities. This shift would likely increase India’s import bill, aggravating the current account deficit.
Amid these challenges, the weakened tariff competitiveness resulting from the proposed U.S. tariffs might deter investment inflows, further widening the current account deficit.
Despite these concerns, Moody’s expressed optimism that a negotiated solution could be found, positioning the final outcome somewhere between the extremes described in their analysis.
According to Investing.com, the analysis emphasizes the risk posed to India’s economic growth and manufacturing aspirations by the proposed tariffs and calls attention to the broader impacts on geopolitical and trade relations.