Despite Steep Levies, Strategic Sectors Insulated
On July 30th, the United States announced a 25% tariff on Indian imports – just a notch below the 26% levied in April 2025. Alongside this move, the U.S. signaled the possibility of further penalties on India’s fuel and defense imports from Russia. In line with this, on August 6th, additional 25% tariffs were announced, taking the total to 50% tariffs on Indian imports. While the announcement has triggered concerns, we believe that the Indian economy remains resilient.
The U.S. accounts for 17–18% of India’s merchandise exports, with gems & jewelry, electronics, pharmaceuticals, and textiles leading the charge. Notably, pharmaceuticals and electronics – two of India’s most strategic export sectors – remain exempt from these tariffs, signaling a room for negotiation, which will prove beneficial for India.
As Negotiations Intensify, Stockpiling Fuels Export Surge
Despite headlines, trade negotiations between India and the U.S. are ongoing. The pattern mirrors America’s approach to the European Union, Japan, and South Korea: announce tariffs first, strike deals later. Meanwhile, the tariff threats have triggered a pre-emptive surge in U.S. stockpiling, giving a short-term boost to India’s exports. India’s exports to the U.S. soared to $43.7 billion in the first five months of 2025, a 25% leap from the same period last year, driven by U.S. stockpiling. Similarly, electronics exports, now boasting a 22.0% share of total merchandise exports (up from 10.2% in 2024), have proven to be resilient amid the storm.
Tech Investments Signal Long-Term Confidence in India
Global tech giants are doubling down on India, reinforcing confidence in the country’s structural fundamentals:
- On August 5th, 2025, Google announced a $6 billion investment to construct its largest global data center in Andhra Pradesh.
- Foxconn invested $1.48 billion in Q2 2025 to expand Indian operations.
- In May, Foxconn-HCL received approval to build a $430 million electronics plant.
- Smartphone exports rose to 39 million units in Q2 2025, marking 7% YoY growth, with Apple’s iPhones leading the surge.
These moves indicate that India’s role in global tech supply chains is expanding, regardless of short-term trade shocks.
Frost Radar™ 2025: India Ranks #3 Globally for Economic Resilience
Per Frost & Sullivan’s upcoming Frost Radar™ for Economic Development 2025, India ranks third globally in withstanding trade and tariff shocks, while maintaining manufacturing competitiveness, and domestic market resilience. This ranking blend hard data (export volumes, tariff exposure, consumption growth, manufacturing growth) with policy frameworks (investment attractiveness, manufacturing incentives, and trade policies). India’s positioning highlights not just strength, but opportunity – the ability to turn short-term friction into long-term advantage.
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