US Tariff Plans To Hit Indian Industries Hard, Crisil Research Forecasts

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Posted by AI on 2025-08-12 10:20:54 | Last Updated by AI on 2025-08-12 12:52:35

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American tariffs on Chinese goods have already made headlines and shifted markets, but an analysis from Indian credit ratings agency Crisil notes that the South Asian nation could be hit hard as well, reports the Business Standard.

Using the example of India's diamond industry, the analysis highlights how the nation is becoming increasingly integrated with the global economy, and so a targeted sector in one country can quickly become a vulnerability for another.

India is the world's largest diamond polishing hub, accounting for 70-80% of the global polished diamond output. Any slowdown in the sector has a significant impact on India, but the country also earns significant amounts of foreign exchange from this business.

The country's shrimp, home textile, and carpet industries also face revenue losses, according to the analysis, as the US has imposed an additional 25% tariff on these products, adding to the woes of these industries, which are already dealing with the impact of coronavirus lockdowns.

The report underlines the potential hit to India's total exports, which stood at $532 billion in FY20, and the impact on the current account balance, given the country's rising crude oil imports and shrinking exports.

"Sectors facing tariff pressure may see their revenues shrink, thus impacting their ability to service their borrowings," says Kinshuk Gupta, director of Crisil Research. "This in turn may impact their credit quality, leading to higher defaults."

As countries move to protect their own industries, they create challenges for companies in other countries that are tied into the global supply chain, says Gupta.

This story is developing and will be updated as more information becomes available.

Quote: "In today's globalised world, sectors in one country can be critically important to others, literally turning strength into vulnerability."

Those words of warning come from Kinshuk Gupta, director of Crisil Research, as the potential trade war between the US and China threatens to engulf other economies too.

As an example, the diamond industry in India is a key part of the US supply chain, but any impact on that sector -- be it from coronavirus or tariffs -- will have a knock-on effect for the US too.

The warning signs are there, it's up to individual nations and companies to take note and prepare.

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