Mumbai: India’s leading benchmark indices Sensex and Nifty, fell about 1% each as foreign institutional investors ramped up selling due to Trump’s decision to hike tariffs on Indian goods to 50%. The Sensex, India’s leading market benchmark, fell 765 points on August 8, making investors poorer by almost Rs.5 lakh crore.
To complicate matters, the Indian Rupee has also relatively weakened against the US Dollar, reaching almost Rs.87 against the dollar, a new high after reaching the same level in February this year.
Trade tensions between India and the US have reached a new low on August 6 after the US President accused India of bankrolling Russia’s war against Ukraine, defying sanctions imposed. The US President signed an executive order hiking trade tariffs to 50%, even as trade negotiations have stalled due to India’s reluctance to allow US agricultural imports.
India has accused the US of having double standards, even as other major buyers of Russian oil-China and Turkey haven’t faced similar tariffs.
Negotiators are racing against time to seal a trade deal with the US, even as Pakistan, China, Vietnam and other countries have already done so. The revised tariffs will be implemented by August 27, even as other countries have managed to seal the deal by the earlier August 1 deadline.
Exporters are already concerned about the hike in tariffs, as fresh orders will now be rerouted to Bangladesh, Vietnam, China and elsewhere with lower tariff rates. Even though India accounts for just 4% of US imports, exporters have expressed concern regarding the missed opportunities due to the tariffs, even though India has a fairly diversified export basket.
Even as the trade negotiations remain in the spotlight, PM Modi has reiterated India’s stand on its agricultural imports.
“For us, the interest of our farmers is our top priority. India will never compromise on the interests of farmers, fishermen and dairy farmers.” PM Modi asserted at a conference in New Delhi.
