Key points
- India’s opposition blames Modi government for diplomatic failure
- Rupee, equity indexes fall after Trump’s tariff threat
- Economists warn tariffs may hurt growth, manufacturing ambitions
ISLAMABAD: Indian opposition parties criticised the government on Thursday, describing US President Donald Trump’s threat of a 25 per cent tariff as a diplomatic failure for New Delhi, while the rupee currency tumbled and equity indexes slid in response to the news.
The 25 per cent rate would single out India more harshly than other major trading partners, and threatens to unravel months of talks, undermining one of Washington’s strategic partners in the region, viewed as a counterbalance to China, according to Reuters.
👉The imposition of a 25% tariff on India, along with penalties, will be catastrophic for our economy.
👉Events like ‘Namaste Trump,’ ‘Howdy Modi,’ and ‘Abki Baar Trump Sarkar’ show that Modinomics and Modi diplomacy have failed.
👉Our advice to the Modi government: national… pic.twitter.com/Vm0lKUedN7
— Congress (@INCIndia) July 31, 2025
Trump said the tariff on imports from India would start from Friday, in addition to an unspecified penalty for Russian dealings and involvement in the BRICS grouping of nations.
In response, the government of Prime Minister Narendra Modi said it was studying the implications of Trump’s remarks and was dedicated to securing a fair-trade deal.
“Collapse of foreign policy”
“This development reflects a broader collapse of foreign policy under the Modi government,” a lawmaker of the main opposition Congress party said in a notice to the lower house of parliament, asking for a discussion on the matter, according to Reuters.
The debate would focus on the “government’s economic and diplomatic failure in preventing the imposition of 25% US tariffs plus penalties on Indian exports,” the notice added.
According to NDTV, the Congress party slammed the BJP government as US President Donald Trump slapped India with 25 per cent tariffs on Wednesday. In a post on X, the Congress party wrote, “country is now bearing the cost of Narendra Modi’s ‘friendship'”.
It blamed Prime Minister Narendra Modi for campaigning for Trump, referring to the “Howdy, Modi!” event in Texas in September 2019.
“Trump slapped a 25% tariff on India, along with a penalty. The country is now bearing the cost of Narendra Modi’s ‘friendship’. Modi campaigned for Trump, hugged him eagerly, posed for photos, and made it trend on social media. In the end, Trump still imposed tariffs on India. India’s foreign policy has completely failed,” the party said.
Donald Trump has just imposed a 25% tariff on India. He has also imposed a penalty.
⦁ Modi campaigns for Trump.
⦁ Gives out slogans like ‘Abki Baar Trump Sarkar’.
⦁ Hugs him like a long-lost brother.In return, Trump goes on to impose such harsh tariff on India.
It is… pic.twitter.com/EOq0i03mf7
— Congress (@INCIndia) July 30, 2025
Commerce Minister Piyush Goyal was expected to brief the lower house later on Thursday, his office said, Reuters reported.
“I don’t care what India does with Russia,” Trump said in a Truth Social post on Thursday, adding, “They can take their dead economies down together, for all I care.”
Russia remained India’s top oil supplier during the first six months of 2025, accounting for 35 per cent of overall supplies.
Economists warned the steep tariff could hurt India’s manufacturing ambitions and trim up to 40 basis points off economic growth in the financial year to March 2026.
India’s benchmark equity indices, the Nifty 50 (.NSEI), opens new tab and BSE Sensex (.BSESN), opens new tab, fell as much as 0.9 per cent each in early trade before paring losses and trading flat.
The rupee was trading down 0.2 per cent at 87.6175 after touching its lowest in more than five months earlier in the day.
“Raw deal”
India has received a “raw deal”, said Priyanka Kishore, an economist at Asia Decoded, according to Reuters.
“While further trade talks may bring the tariff rate down, it appears unlikely that India will secure a significantly better outcome than its eastern neighbours,” she added.
That would raise questions about India’s relative appeal as a China plus one destination, she said, referring to a strategy of diversifying supply chains through manufacturing outside China to reduce geopolitical and operational risks.
Trade talks continued, Trump said on social media, however, as nations face a Friday deadline to strike deals on reciprocal tariffs or have a US tariff slapped on their exports.
The US levy on India exceeds those agreed by some other nations in deals with the Trump administration. For example, the tariff on Vietnam is set at 20 per cent and on Indonesia at 19 per cent, with levies of 15 per cent on Japanese and European Union exports.
On Wednesday, Trump said Washington had reached a trade deal with Pakistan that Islamabad said would lead to lower tariffs on its exports.
Since India’s short but deadly conflict with Pakistan in May, New Delhi has been unhappy about Trump’s closeness with Islamabad and has protested, casting a shadow over trade talks.
Despite former public displays of bonhomie between Trump and Modi, India has taken a slightly harder stance against the United States in recent weeks.
Trump has repeatedly taken credit for the India-Pakistan ceasefire he announced on social media on May 10, but India disputes his claim that it resulted from his intervention and trade threats.
“Govt has destroyed economic policy”
“The government has destroyed our economic policy, has destroyed our defence policy, has destroyed our foreign policy,” opposition leader Rahul Gandhi told reporters.
THE INDIAN ECONOMY IS DEAD.
Modi killed it.
1. Adani-Modi partnership
2. Demonetisation and a flawed GST
3. Failed “Assemble in India”
4. MSMEs wiped out
5. Farmers crushedModi has destroyed the future of India’s youth because there are no jobs.
— Rahul Gandhi (@RahulGandhi) July 31, 2025
The United States, the world’s largest economy, now has a trade deficit of $45.7 billion with India, the fifth largest, according to Reuters.
