Indian economy under threat
growth rate expected to fall
Pakistan and other countries may benefit: Shahid Rashid Butt
Staff Report
ISLAMABAD: Former president of the Islamabad Chamber of Commerce, Shahid Rashid Butt, has said that the United States’ decision to impose an additional 25% tariff on Indian exports has severely rattled India’s economy and placed Prime Minister Narendra Modi’s political future under threat. With the total tariff rate now standing at 50% for Indian goods entering the US market, key industries are bracing for serious fallout.
The punitive action, announced by Washington as a response to India’s continued import of discounted Russian crude oil, has triggered fresh uncertainty in South Asian economic and political circles. According to US officials, India has not only been purchasing large volumes of Russian oil—despite Western sanctions—but has also been reselling it in international markets at substantial profit. This, the White House claims, indirectly funds Russia’s war machine in Ukraine.
Butt argued that India’s economic model, heavily reliant on exports to Western markets, is now under pressure. “As prices of Indian products rise due to the tariff hike, global demand is likely to fall. This will shrink industrial output, raise unemployment, and ultimately lower India’s GDP growth rate,” he said. Independent analysts now forecast that India’s GDP could fall below the 6% growth mark in 2025.
He further added that the new tariff regime creates an opportunity for Pakistan and other developing economies in the region to increase their exports to Western markets, particularly in sectors where India is expected to lose competitiveness. Pakistan’s textile and leather industries, for instance, could find greater access to buyers previously dependent on Indian supply chains.
The Indian government, however, has rejected the US move as unjust and unilateral. New Delhi insists it is acting within its sovereign rights to secure affordable energy for its population. Nonetheless, Indian policymakers have begun urgent diplomatic efforts to de-escalate tensions with Washington while also engaging alternative markets to absorb the potential export losses.
According to Butt, 55% of India’s total exports are vulnerable to these new tariffs. Key sectors such as textiles, leather, machinery, jewelry, pharmaceuticals, and agriculture are expected to bear the brunt. Small and medium enterprises, which form the backbone of India’s export economy, are especially exposed.
The development has also renewed debate over India’s regional posture. “India must abandon its policy of regional hegemony and adopt a more cooperative approach toward its neighbours,” Butt stated. “Only by working collectively can the countries of South Asia realize the shared dream of peace, prosperity, and development for their two billion citizens.”
With rising geopolitical tensions, fluctuating oil prices, and an evolving global trade order, the US-India tariff standoff is likely to shape the regional economic agenda in the coming months. Much will depend on whether India chooses confrontation or recalibration.
The episode, observers say, underscores the fragility of current global alliances and the urgent need for SAARC nations to prioritize economic integration and political cooperation over competition and unilateralism.
