Indian equity markets opened on a nervous note Thursday as investors weighed the impact of the steep tariff hike announced by the US administration. Trading resumed after the Ganesh Chaturthi holiday, with participants closely tracking the fallout from the additional 25 per cent duty on Indian goods that came into effect on Wednesday.
The benchmark BSE Sensex opened under 80,700 and registered a loss of more than 100 points, while the NSE Nifty50 also slipped over 50 points to start the session at 24,657, around 9:15 AM.
At 8:34 AM, GIFT Nifty dropped nearly 100 points to hover near 24,650, signaling a weak start for the day. In the pre-open session, both Sensex and Nifty indicated marginal declines, with the former testing 80,700, and the latter hovering under 24,700, around 9:08 AM.
Tariff Hike Raises Market Anxiety
The fresh levy effectively doubles the overall duty on Indian exports to 50 per cent, putting India among the hardest-hit trade partners of the US alongside Brazil and China. Analysts expect labour-intensive sectors—such as textiles, seafood, and gems and jewellery—to bear the brunt of this move.
According to SBI Research, the tariff action could shave 40–50 basis points off US GDP by triggering higher input cost inflation. “As $45 billion of exports will be impacted due to 50 per cent tariffs, at worst scenario, India’s trade surplus will convert to trade deficit. However, we believe trade negotiations will restore confidence and improve export to US,” the report noted.
The report also highlighted India’s loss of price competitiveness to other Asian exporters. The US has imposed steeper duties on India compared to China (30 per cent), Vietnam (20 per cent), Indonesia (19 per cent), and Japan (15 per cent), making it likely that orders will be redirected to these markets.
Sectoral Impact and Global Ripples
Moody’s Analytics warned that the new tariffs could dampen demand for Indian goods. “The drop in sales to their largest client will hurt,” it said, adding that Europe and Asia-Pacific economies are also reeling from US trade actions. The agency cautioned that exporters might cut prices to hold on to orders, but this could erode margins and weigh on investment.
The gems and jewellery sector, which ships goods worth $28.5 billion annually with the US accounting for nearly one-third of exports, faces major disruption. Shrimp exporters are equally exposed, as over half of India’s seafood shipments go to the US. In contrast, the pharmaceutical sector remains insulated, with drug imports exempted from the new tariffs. India currently supplies 6 per cent of America’s pharma imports, making this a key buffer in the trade equation.
Russia-Ukraine Is ‘Modi’s War’: Peter Navarro
The trade dispute has spilled into geopolitics. White House trade adviser Peter Navarro accused India of prolonging the Russia-Ukraine war by continuing to buy discounted Russian oil mere hours after the new tariffs came into effect. In an interview with Bloomberg Television on Wednesday, Navarro said, “I mean Modi’s war because the road to peace runs, in part, through New Delhi.”
He alleged that revenue from these oil purchases was helping Moscow “fund its war machine,” forcing Washington to increase taxpayer-funded aid to Ukraine. “Everybody in America loses because of what India is doing,” Navarro claimed. “Consumers and businesses lose, workers lose because India’s high tariffs cost us jobs, factories, and higher wages. And then taxpayers lose because we have to fund Modi’s war.”
Navarro hinted at a possible tariff rollback if India changes course: “India can get 25 per cent off tomorrow if it stops buying Russian oil and helping to feed the war machine,” he warned.
Inflation Concerns in the US
Economists warn that the tariff escalation will push US inflation higher, as costs rise across electronics, automobiles, and consumer goods. Analysts now expect price pressures to persist above the Federal Reserve’s 2 per cent target through 2026.
Previous Session Recap
The uncertainty has already rattled domestic markets. On Tuesday, the Sensex crashed nearly 850 points to close at 80,786.54, while the Nifty50 ended just above 24,700, slipping over 250 points.
