India may lose its competitive edge in nearly $64 billion worth of exports to the United States following new tariffs imposed by President Donald Trump, combined with a potential penalty for purchasing Russian oil, according to an internal government assessment reviewed by Reuters.
The report, compiled by Indian government officials, estimates that the newly announced 25% tariff on Indian goods—already the highest imposed on any Asian country—combined with an assumed 10% penalty linked to oil imports from Russia, could render around 80% of Indian exports to the U.S. uncompetitive. The total impact could reduce India’s GDP growth by 40 basis points, the officials said.
Despite the mounting pressure, the Reserve Bank of India has kept its growth forecast for the fiscal year unchanged at 6.5% and held interest rates steady, citing the broader resilience of India’s $4 trillion economy, in which exports form a relatively smaller share.
The proposed U.S. penalties come amid escalating diplomatic tensions between Washington and New Delhi. Trump’s administration has taken a hard line on India’s continued purchase of Russian crude, threatening additional economic consequences unless India aligns with American efforts to isolate Moscow.
According to the assessment, India’s exports to the U.S. stood at approximately $81 billion in 2024, covering key sectors such as garments, pharmaceuticals, petrochemicals, and gems and jewellery. With a potential effective tariff of 35% on Indian goods—25% base tariff plus the assumed 10% penalty—government analysts warn of severe “price disadvantage” that could result in significant export losses, especially in sectors with high competition from nations facing lower duties.
Officials quoted in the report said the estimates are provisional and could shift based on further clarification from the U.S. administration. The Trump White House has indicated that any decision regarding the penalty on Russian oil will follow the outcome of diplomatic efforts to end the war in Ukraine. U.S. envoy Steve Witkoff is currently in Moscow for last-minute negotiations ahead of a White House-imposed deadline for peace.
In response, India has launched a diplomatic push to manage tensions. National Security Adviser Ajit Doval is in Moscow for talks expected to include discussions on Russian oil imports and pending defence cooperation, including delivery of the S-400 missile defence system. Foreign Minister Subrahmanyam Jaishankar is also expected to visit Russia in the coming weeks.
India’s Ministry of External Affairs and Ministry of Commerce have not issued official responses, but behind-the-scenes efforts are underway to balance longstanding ties with Russia while addressing growing concerns from Washington.
