With Donald Trump's harsh tariffs against India set to kick in from Friday, the world's fifth-largest economy is bracing for a bumpy ride.
The US president on Wednesday said New Delhi would face 25 percent tariffs and a separate "penalty" for purchases of Russian weapons and energy.
Trump later told reporters talks on New Delhi's tolls were ongoing and "we'll see what happens", but did not elaborate.
Here's a rundown on what's at stake.
What would be the impact on India?
The world's most populous country is not an export powerhouse, but the United States is its largest trading partner, with New Delhi shipping goods worth $87.4 billion in 2024.
India's protectionist trade policies, however, saw it run up a surplus of nearly $46 billion the same year.
Analysts say the tariffs alone could result in a 20-50 basis point hit to India's gross domestic product.
Also Read: India, Russia can take their dead economies down together- Trump attacks New Delhi-Moscow ties amid US tariff move
Bloomberg Economics have also projected that a 26 percent reciprocal levy could cut US-bound shipments by 30 percent.
The overall impact of Trump's policies could be more severe depending on the Russian "penalty" that is eventually levied on Indian exports.
More broadly, experts say, the president's latest move poses a challenge to India's manufacturing dreams.
"The 25 percent tariff... would undermine India's attractiveness as an alternative manufacturing hub to China," Shilan Shah of Capital Economics said in a note.
Since the Indian tariff is higher than those on other Asian economies, "it would somewhat diminish India's appeal", Shah said, but added that the country still retained other advantages such as low labour costs.
What sectors will be most affected?
India's top exports include smartphones, drugs, gems, textiles and industrial machinery, with some of the most labour-intensive goods -- including jewellery and seafood -- under threat.
India's jewellery sector, which exported goods worth more than $10 billion last year, has warned of job losses potentially hitting "thousands".
Also Read: Who’s most at risk from Trump’s 25% India tariffs
Kirit Bhansali, chairman of Gem and Jewellery Export Promotion Council, said the tariffs would "inflate costs, delay shipments... and place immense pressure on every part of the value chain".
Analysts at Nomura say the seafood sector -- a key supplier of shrimps and prawns to US supermarket chains like Walmart -- "could lose some of its competitive edge to other suppliers".
Smartphones and pharmaceuticals are currently exempt from Trump's "reciprocal" duties.
What's holding a deal back?
India's reluctance to open its agricultural and dairy sectors is one of the key sticking points, with the Trump administration having long singled out New Delhi for its high agricultural tolls.
But officials say Delhi is unwilling to risk angering farmers, a powerful voting bloc, by dropping tariffs on staples like rice and wheat.
It has also so far refused to allow the import of genetically modified products.
While the window of opportunity to seal an interim trade deal is closing, the two sides remain committed to negotiating the first part of a broader trade agreement by October.
US officials are likely to visit India for talks in August.
Delhi has kept its cards close to its chest, but a joint statement following Prime Minister Narendra Modi's visit to Washington in February said the two sides would work "to establish the United States as a leading supplier of crude oil and petroleum products and liquified natural gas to India".
This could prove to be a key bargaining chip as energy purchases have figured in other US trade deals.
From Russia with love?
Trump's anger with Indian purchases of Russian military equipment and oil overlooks the fact that New Delhi and Moscow have had historically close ties since the Cold War, say analysts.
Data from the Stockholm International Peace Research Institute shows Russia supplied 76 percent of India's military imports between 2009 and 2013.
And while this percentage has dropped significantly in recent years, India still depends on Russia for spare parts.
Moscow is also an important supplier of advanced weaponry including submarine technology and cruise missiles.
India has become a major buyer of Russian oil, providing a much-needed export market for Moscow after it was cut off from traditional buyers in Europe because of the Ukraine war.
That has drastically reshaped energy ties, with India saving itself billions of dollars while bolstering Moscow's coffers.
While India can pivot to find other sources of crude, it will likely find it harder to transition away completely from Russian military hardware.
"The Russia reasoning is surprising given that Trump has taken a less confrontational position toward Moscow than did President Biden," South Asia analyst Michael Kugelman told AFP.
"New Delhi is the latest victim of Trump's infamous unpredictability."
The US president on Wednesday said New Delhi would face 25 percent tariffs and a separate "penalty" for purchases of Russian weapons and energy.
Trump later told reporters talks on New Delhi's tolls were ongoing and "we'll see what happens", but did not elaborate.
Here's a rundown on what's at stake.
What would be the impact on India?
The world's most populous country is not an export powerhouse, but the United States is its largest trading partner, with New Delhi shipping goods worth $87.4 billion in 2024.
India's protectionist trade policies, however, saw it run up a surplus of nearly $46 billion the same year.
Analysts say the tariffs alone could result in a 20-50 basis point hit to India's gross domestic product.
Also Read: India, Russia can take their dead economies down together- Trump attacks New Delhi-Moscow ties amid US tariff move
Bloomberg Economics have also projected that a 26 percent reciprocal levy could cut US-bound shipments by 30 percent.
The overall impact of Trump's policies could be more severe depending on the Russian "penalty" that is eventually levied on Indian exports.
More broadly, experts say, the president's latest move poses a challenge to India's manufacturing dreams.
"The 25 percent tariff... would undermine India's attractiveness as an alternative manufacturing hub to China," Shilan Shah of Capital Economics said in a note.
Since the Indian tariff is higher than those on other Asian economies, "it would somewhat diminish India's appeal", Shah said, but added that the country still retained other advantages such as low labour costs.
What sectors will be most affected?
India's top exports include smartphones, drugs, gems, textiles and industrial machinery, with some of the most labour-intensive goods -- including jewellery and seafood -- under threat.
India's jewellery sector, which exported goods worth more than $10 billion last year, has warned of job losses potentially hitting "thousands".
Also Read: Who’s most at risk from Trump’s 25% India tariffs
Kirit Bhansali, chairman of Gem and Jewellery Export Promotion Council, said the tariffs would "inflate costs, delay shipments... and place immense pressure on every part of the value chain".
Analysts at Nomura say the seafood sector -- a key supplier of shrimps and prawns to US supermarket chains like Walmart -- "could lose some of its competitive edge to other suppliers".
Smartphones and pharmaceuticals are currently exempt from Trump's "reciprocal" duties.
What's holding a deal back?
India's reluctance to open its agricultural and dairy sectors is one of the key sticking points, with the Trump administration having long singled out New Delhi for its high agricultural tolls.
But officials say Delhi is unwilling to risk angering farmers, a powerful voting bloc, by dropping tariffs on staples like rice and wheat.
It has also so far refused to allow the import of genetically modified products.
While the window of opportunity to seal an interim trade deal is closing, the two sides remain committed to negotiating the first part of a broader trade agreement by October.
US officials are likely to visit India for talks in August.
Delhi has kept its cards close to its chest, but a joint statement following Prime Minister Narendra Modi's visit to Washington in February said the two sides would work "to establish the United States as a leading supplier of crude oil and petroleum products and liquified natural gas to India".
This could prove to be a key bargaining chip as energy purchases have figured in other US trade deals.
From Russia with love?
Trump's anger with Indian purchases of Russian military equipment and oil overlooks the fact that New Delhi and Moscow have had historically close ties since the Cold War, say analysts.
Data from the Stockholm International Peace Research Institute shows Russia supplied 76 percent of India's military imports between 2009 and 2013.
And while this percentage has dropped significantly in recent years, India still depends on Russia for spare parts.
Moscow is also an important supplier of advanced weaponry including submarine technology and cruise missiles.
India has become a major buyer of Russian oil, providing a much-needed export market for Moscow after it was cut off from traditional buyers in Europe because of the Ukraine war.
That has drastically reshaped energy ties, with India saving itself billions of dollars while bolstering Moscow's coffers.
While India can pivot to find other sources of crude, it will likely find it harder to transition away completely from Russian military hardware.
"The Russia reasoning is surprising given that Trump has taken a less confrontational position toward Moscow than did President Biden," South Asia analyst Michael Kugelman told AFP.
"New Delhi is the latest victim of Trump's infamous unpredictability."
You may also like
UK: British Sikh man fatally stabbed in London; 27-year-old charged with murder
UAE: Soon, pay digitally in stores, give pocket money online with Digital Dirham
'Moreish' and crunchy chips can be made with 1 surprising veg instead of potatoes
You can get an Olaplex Hair Perfector that makes hair 'silky instantly' for £4 today
Merit's 'five minute routine' make-up kit for glowy skin gets axed by £30 in rare deal
