New Delhi 8 Aug 2025: A day after US President Donald Trump announced 50 per cent tariffs on Indian goods, Prime Minister Narendra Modi said Thursday he would not compromise on the agriculture sector.
The US-India trade battle has escalated sharply as US
President Donald Trump imposed an additional 25% tariff on Indian imports, on
top of an existing 25% tariff, bringing the total tariff on Indian goods
entering the US to 50%.
This move is a direct punitive response to India's continued
purchase of Russian oil amid the Ukraine conflict, which the US cites as a
threat to its national security and foreign policy. The new tariff will take
effect on August 27, 2025, following the initial 25% tariffs that started
earlier in the month.
This sudden tariff increase makes India one of the most
heavily taxed US trading partners in Asia and parallels similar tariffs imposed
on Brazil.
India has condemned the tariffs as unfair, unjustified, and
unreasonable, emphasizing that its oil imports are based on market dynamics and
essential for the energy security of its 1.4 billion people.
Indian officials also note the inconsistency of the US
policy, as other nations also import Russian oil without facing such penalties.
The trade tensions have also strained the warm personal
relationship between Prime Minister Narendra Modi and President Trump. While
previously there had been active negotiations on a trade deal to enhance
bilateral trade to $500 billion, Trump has now ruled out further talks until
the oil import issue and broader trade tensions are resolved.
Modi convened a high-level cabinet meeting to assess the
impact of the tariffs and consider strategic responses. The tariffs severely
threaten India's export sectors like textiles, jewelry, and manufacturing,
which rely heavily on the US market (18% of Indian exports). Moody's warns that
the tariff hike could slow India's GDP growth by about 0.3%, undermining recent
gains in attracting global investment and industrial growth.
The US rationale for these tariffs is part of a broader
strategy to exert economic pressure on Moscow to end its war in Ukraine, as
India remains among the largest buyers of Russian oil. Trump's administration
argues that these secondary sanctions are necessary to curb Russia's war
economy.
Overall, this trade battle risks undoing decades of diplomatic and economic progress between the US and India, with significant consequences for both economies and a diplomatic fallout whose full scope is still unfolding.
For New Delhi, one of the main sticking points in trade
negotiations has been Washington's demand to access India's vast agricultural
and dairy market.
India has remained steadfast about its labour-intensive
agricultural sector, unwilling to risk angering farmers, a powerful voting
bloc.
"We will not compromise with the interests of our farmers, our dairy sector, our fishermen," Modi said during a speech at a conference in New Delhi, his remarks widely seen as his first public response to the tariffs.
"I know I will have to pay a personal price for this,
but I am ready for it," he added, without giving further details.
India has also refused to allow the import of genetically
modified products.
Additionally, New Delhi fears that allowing the import of
dairy products may upset the cultural and religious sensitivities of India's
majority Hindus, who revere cows as sacred.
It seems a far cry from India's early hopes for special
tariff treatment.
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