A steep 50% tariff on Indian goods entering the United States has officially come into force, escalating trade tensions between Washington and New Delhi.
The move, signed off by U.S. President Donald Trump, was framed as punishment for India’s continued imports of Russian oil and defense equipment.
It places India among the countries facing the world’s highest trade barriers, raising fears of a major blow to exports and growth in Asia’s third-largest economy.
The Modi government has scrambled to limit the fallout. Earlier this month, Prime Minister Narendra Modi announced a set of tax relief measures aimed at protecting households and small businesses.
During Independence Day celebrations at Delhi’s Red Fort, he called on shopkeepers and manufacturers to display “Made in India” signs and urged citizens to support local industries.
He described the push for self-reliance as a matter of national pride rather than desperation.
In addition to income tax cuts worth billions, Modi has pledged reforms to India’s complex goods and services tax system.
A simplified structure is being prepared by the finance ministry to stimulate consumption, which makes up nearly 60% of India’s GDP.
Economists believe this fiscal support could cushion the impact of weaker exports, though they warn that manufacturing remains stagnant at around 15% of GDP despite years of subsidies and incentives.
India’s stock markets have shown resilience, helped by a recent credit rating upgrade, but analysts caution that prolonged tariff pressure could derail growth momentum.
With trade talks suspended and Washington signaling little compromise, the standoff highlights the growing strain in relations between two of the world’s largest economies.