India’s trade policy under spotlight as Trump targets Indian imports

India’s economy is far from dead and remains one of the most resilient among major nations, trade and policy experts said, rejecting US President Donald Trump’s claim that India and Russia could “take their dead economies down together.”

“I don’t care what India does with Russia. They can take their dead economies down together, for all I care. We have done very little business with India, their Tariffs are too high, among the highest in the World,” Trump said on his Truth Social platform.

Trump’s remarks, made while announcing a 25% tariff on Indian goods starting 1 August and warning of penalties over India’s trade with Russia, have sparked sharp reactions across India’s economic and political circles.

“India’s economy is not dead. It is strong, self-reliant, and has managed inflation better than most,” said Ajay Srivastava, founder of the Global Trade Research Initiative.

He dismissed Trump’s justification for the tariff hike, saying, “India didn’t back out of trade talks. It engaged seriously but didn’t give in—especially on farming, which supports over 700 million people.”

Srivastava pointed out that other countries like the UK, Japan, and EU made major concessions to avoid US tariffs, while India held its ground.

He also rejected criticism of India’s trade policies.

“Our tariffs follow global rules, and non-tariff measures are common everywhere. Cheaper Russian oil helped India stabilize prices during a volatile period,” Srivastava said. “A deal is still possible, but only if it’s fair.”

Aditi Raman, associate economist at Moody’s Analytics, said India is less exposed than others to trade shocks because it relies more on domestic demand.

Still, she warned that sectors like pharmaceuticals, gems, and textiles could feel the pinch.

“The US has long pressed India to open up its farm and dairy markets, but India has consistently held back,” she said.

Vinit Bolinjkar, head of research at Ventura, said the new tariff and possible penalties over Russian oil and arms deals pose “a real risk to India’s export-driven sectors.”

But he added that India may still fare better than countries like China and Vietnam, which face even steeper US tariffs.

“We need to act fast—diversify our export markets and strike new trade deals,” he said.

Jyoti Prakash of AlphaaMoney said the tariff move could slow India’s economic growth by 0.2 to 0.3%.

“But it’s unlikely to last in this form,” she added. “We expect a trade deal in the next six months that could lower the tariff to about 15 percent.”

She also said Indian companies may take a small earnings hit, as growth and profitability are closely linked in India.

Congress leader Rahul Gandhi seized on Trump’s remarks, saying, “Everybody knows the Indian economy is dead.”

He accused Prime Minister Narendra Modi of staying silent and asked, “Why can’t the PM respond? Who’s really in control?”

Gandhi added, “Trump keeps saying it. What’s the truth?”

Congress party leader Manickam Tagore blamed Modi’s “friendship” with Trump for the tariffs, pointing to the prime minister’s support at events like “Howdy, Modi!” as evidence that close personal ties failed to yield benefits.

Other opposition party leaders have called the tariffs evidence of a “complete failure of foreign policy,” and said the country is “now bearing the cost of Narendra Modi’s ‘friendship.’

However, Congress member of Parliament (MP) Rajeev Shukla said, “Trump saying that the economies of India and Russia are dead is wrong. The Indian economy is not dead… Trump is living in a delusion.”

Shiv Sena (UBT) MP Priyanka Chaturvedi also dismissed the comment, and said, “The Indian economy is in the top five in the world and one of the fastest-growing. Calling it dead can only come from arrogance or ignorance.”

A day earlier, Trump said on his social media platform that while India is our friend, we have, over the years, done relatively little business with them, while slapping a 25% tariff on exports from the country, in addition to a penalty.

“Remember, while India is our friend, we have, over the years, done relatively little business with them because their Tariffs are far too high, among the highest in the World, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any Country,” Trump posted on Truth Social.

“Also, they have always bought a vast majority of their military equipment from Russia, and are Russia’s largest buyer of ENERGY, along with China, at a time when everyone wants Russia to STOP THE KILLING IN UKRAINE — ALL THINGS NOT GOOD! INDIA WILL THEREFORE BE PAYING A TARIFF OF 25%, PLUS A PENALTY FOR THE ABOVE, STARTING ON AUGUST FIRST. THANK YOU FOR YOUR ATTENTION TO THIS MATTER. MAGA!”

While the political debate intensifies, trade talks between India and the US are expected to resume in August, with some analysts believing that the tariffs are more a negotiating tactic than a permanent shift in US trade policy.