US President Donald Trump on Tuesday said he would substantially raise tariffs on India within the next 24 hours, stating that while India is set to offer the US “zero tariffs” under a trade deal, it would not be good enough due to its purchase of Russian oil.
“India has the highest tariffs of any country. We do very little business with India because their tariffs are so high. So, India has not been a good trading partner — they do a lot of business with us, but we don’t do much business with them. So, we settled on 25 per cent [tariffs], but I think I’m going to raise that very substantially over the next 24 hours, because they’re buying Russian oil, they’re fuelling the war machine. If they are going to do that, I am not going to be very happy,” Trump said in an interview with CNBC.
“Now I will say this: India went from the highest tariffs ever — they will give us zero tariffs. And they are going to let us go in. But that’s not good enough because of what they’re doing with Russian oil — not good,” Trump added, while responding to a question on sticking points.
When asked about the price of oil if Russian supplies were removed from the market, Trump said he was not concerned about prices, as the US is drilling at levels never seen before.
Rating agency ICRA on Monday revised India’s FY26 GDP growth forecast downward from 6.2 per cent to 6.0 per cent, citing US tariffs and uncertainty around potential penalties as key risks. Despite a robust trade surplus with the US — which rose to $41 billion in FY2025 from $21 billion in FY2015 — India’s competitive edge could be eroded in the absence of a bilateral trade resolution, ICRA said.
The agency identified textiles, auto components, tyres, chemicals, agrochemicals, and cut & polished diamonds (CPD) as the worst-hit sectors. On the other hand, pharmaceuticals, petroleum products, and telecom instruments remain relatively stable, according to the report.
“The pharma sector, with 37 per cent of its exports directed to the US, has so far been exempted from the new tariffs. The telecom instruments sector, where the US forms over 40 per cent of India’s export base, faces negligible impact as competing nations have only slightly lower tariffs. Petroleum product exports are also excluded from the tariff hikes, though India’s reliance on discounted Russian crude — which has shrunk in FY2025 — may have indirect cost implications,” the report said.
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The report also said there are signs of export re-routing as Indian exporters seek to maintain access to the US market. CPD exporters, for example, may shift to trade hubs such as Belgium and the UAE, while firms in sectors like auto and tyres are attempting to diversify into the EU, UK, and Asia-Pacific markets, though this will take time, it said.
“The risk of trade being redirected to countries like Vietnam and Indonesia is high, given their lower tariff burden and increasing share in US imports,” it added.
ICRA said that unless a bilateral trade agreement is swiftly concluded, the current tariff structure could significantly alter India’s export trajectory in FY2026 and beyond. The high sectoral dependence on US markets, coupled with tariff asymmetry, poses a serious challenge to India’s trade competitiveness, the report said.
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