The Finance Ministry said in a report on Wednesday (August 27, 2025) that the immediate impact of American tariff on Indian exports may appear limited, but their secondary and tertiary impact on the economy should be addressed.
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The monthly economic review issued by the Ministry said that Indo-US trade talks are important in addressing these issues, including the second-educational and tertiary effects of high tariffs by the US, which is a monthly economic review released by the Ministry.
50% tariff on Indian goods entering the US, which came into force from Wednesday (August 27, 2025), which would affect exports of over $ 48 billion. The area tolerating the high import duties imposed by the Trump administration includes textiles/ clothes, gems and jewelery, shrimp, leather and shoes, animal products, chemicals and electrical and mechanical machinery.
“While the immediate effect of recent American tariffs on Indian exports may appear limited, their secondary and tertiary impact on the economy should face challenges that should be addressed. In this context, the ongoing Indo-US trade talks will be important,” it is said.
According to global change towards diversification and strategic reality, it said, India is actively pursuing a diverse business strategy to maintain its flexible business performance.
“This includes the recently concluded FTA with the UK and EFTA and FTA talks with the US, European Union, New Zealand, Chile and Peru. But, these initiatives will take time to show the result and it cannot fully address the reduction in exports to the US that may be India’s current tariff rates.”
Given that India’s economy is at a critical turn, the report states, with its strong economic performance, policy stability and investment of high infrastructure, as well as an upgrade upgrade by S&P from ‘BBB’ to ‘BBB’.
“This upgrade acts as a testimony for the strong macroeconomic fundamental and ongoing improvement initiatives of the economy. The evaluation comes in a moment when the economy has displayed a lot of flexibility to global challenges, which contributes to strong domestic demand and prudent policy management economic stability.”
On the domestic front, the report states that the above normal rainfall and better sowing of kharif crops, headline inflation can remain moderate in the near period.
“A increased market arrival in Q1, comfortable buffer stock and better output possibilities, combined with stable global oil markets, can keep food grains prices moderate. Negative risk for global development is likely to be in the investigation of international commodity prices, partially offset the impact of high tariffs.”
To increase economic growth amidst challenging global scenario, the Prime Minister has announced some initiatives focusing on policy reforms.
First of all, the construction of a task force for the next generation reforms is to further reduce simple rules, reduce compliance costs, and promote more capable environment for startups, MSMEs and entrepreneurs, it is said, it has been said, emphasized the essential commodities of GST reforms of the next generation in the coming months.
Completing these measures, reducing the cost of borrowing rating upgrade, attracting more foreign capital flows, widening access to global capital markets, promoting disposable income, reducing inflation pressure, projected to cut input costs for businesses and support growth.
Amidst global uncertainties, these government initiatives are charting a development trajectory operated by long -term reforms that will promote disposable income, reduce inflation pressure, and reduce costs for businesses, said.
It further stated that the government has been focused on employment generation through schemes like PM Wikiyet Bharat Rosagar Scheme, combined with the initiative of reforms and skill development in the education sector, its purpose is to build a task force that is well prepared for the demands of the changing world.
Together, these improvement initiatives and better sovereign ratings will encourage investment, encourage consumption, increase employment opportunities and strengthen the development by strengthening the confidence in the long -term trajectory of the economy.
Published – August 28, 2025 02:27 AM IST
