Moody’s credit rating agency announced that the customs duties imposed by US President Donald Trump at a rate of 50% on Indian imports could sharply undermine India’s industrial ambitions and slow its economic growth. Trump recently imposed an additional 25% tariff on Indian goods, justifying his decision by India’s continued import of Russian oil, a move that could severely affect the jewelry, gemstones, textiles, and automobile components sectors in India.

The new import tax will take effect 21 days after August 7, raising tariffs on some Indian goods to as high as 50%, among the highest rates imposed on any US trading partner.

The United States is the largest market for India in the gems and jewelry sector, accounting for $10 billion in exports last year, about 30% of India’s total global sales in this sector.

The Gems and Jewellery Export Promotion Council of India warned that these tariffs could completely paralyze the industry, especially with competing manufacturing hubs like Turkey, Vietnam, and Thailand subject to lower taxes.

India’s textile industry has already started receiving disturbed communications from its customers following Trump’s announcement of the additional 25% tariffs.

In 2024, these companies exported goods worth over $2 billion, and in the first half of 2025, they shipped products worth about $1 billion to American customers.

The automobile components sector in India has seen rapid growth in recent years and is one of the few sectors achieving a trade surplus. The United States is its largest export market, representing about one-third of global trade.

In 2024, India exported automobile components worth $6.6 billion to the US, including more than $3.5 billion for small car and light truck parts, which remain exempt from the 50% tariff and will only pay 25%.

However, exports of commercial vehicle components, such as large trucks and agricultural equipment, valued at about $3 billion, will be subject to a 50% tariff.