Analysts have cut forward-looking earnings estimates after US tariffs for India’s large and mid-sized firms by 1.2 per cent over the past two weeks, marking the sharpest revision in Asia. This follows five consecutive quarters of single-digit earnings growth, a stark contrast to the robust 15 to 25 per cent expansion seen between 2020-21 and 2023-24. For countless Indian households, these figures translate into worries about job security and stagnant wages, particularly in industries tied to global trade.
Economic Impact of US Tariffs on India’s Growth
While India’s economy is largely domestic, with Nifty 50 companies deriving just nine per cent of revenue from the United States, the proposed US tariffs could significantly disrupt growth. Experts warn that a sustained 50 per cent levy on exports might reduce GDP growth by up to one percentage point, potentially lowering it from 6.5 per cent to around 6 per cent for the next fiscal year. This could result in economic losses of 18 billion to 22 billion dollars, a setback felt deeply by communities striving for financial stability.
Sectors Hit Hardest by Earnings Downgrades
The earnings downgrades have struck key industries, with automobiles, capital goods, food and beverages, and consumer durables facing profit forecast cuts of one per cent or more. Textiles, a vital source of employment for rural and urban workers, are particularly vulnerable due to their reliance on exports. The potential for job losses in this sector resonates emotionally, affecting families who have sustained themselves through generations of skilled labour.
Gems and jewellery, pharmaceuticals, leather goods, and engineering products also face pressures, with India’s 78.5 billion dollar annual exports to the US at risk of declining by 25 to 40 per cent under full tariff implementation. This could lead to a 20 billion to 35 billion dollar shortfall, weakening the rupee, increasing import costs, and fuelling inflation that squeezes household budgets. For small-scale exporters and farmers, this uncertainty threatens not just incomes but also aspirations for better education and opportunities.
Government Measures to Counter US Tariffs
To mitigate the impact of US tariffs, the Indian government has proposed consumption tax reforms to boost domestic demand and cushion external shocks. Set to be implemented by October, these measures are projected to add 0.35 to 0.45 percentage points to GDP growth by the fiscal year ending March 2027. For many Indians, this offers hope, as lower taxes could stimulate spending and support sectors less dependent on international markets, building on India’s strong 8.8 per cent average GDP growth from 2022 to 2024, the highest in the Asia-Pacific.
These efforts aim to protect the livelihoods of those in export-sensitive industries, from textile workers to small-scale traders, who form the backbone of India’s economic story. By strengthening domestic resilience, the government seeks to preserve the dreams of families across the nation.
Strategic Responses to Global Trade Shifts
The US tariffs have strained Indo-US relations, prompting India to explore stronger ties with Europe, China, and Russia. Accelerated free trade agreements and multilateral engagements could diversify opportunities, reducing dependence on any single market. For the Indian populace, this shift carries both caution and optimism, opening new pathways while navigating geopolitical complexities.
India’s projected 6.8 per cent annual GDP growth over the next three years reflects resilience, supported by a young workforce and advancements in industrial complexity. Markets, with reasonable valuations for large-cap firms, may stabilise as earnings recover, offering reassurance to investors and savers.
A Human Story Amid Economic Challenges
At its heart, this is a story of people: textile artisans fearing for their jobs, exporters in gems and jewellery facing uncertain markets, and families hoping for policies that safeguard their aspirations. The earnings downgrades driven by US tariffs highlight the deep connection between global trade and local lives, where decisions in distant capitals ripple through communities.
As India navigates this turbulent period, its focus on domestic reforms and strategic alliances offers a path forward. With resilience and unity, the nation can transform challenges into opportunities, ensuring that economic setbacks do not dim the spirit of progress. The threat of US tariffs underscores the need for vigilance, as India works to secure a stable and prosperous future for its people.
Published in SouthAsianDesk, August 21st, 2025
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