Trump’s trade war with India is already damaging the economy before the new tariffs come into play on August 27. Foreign investors have pulled ₹1 lakh crore ($11B) out of Indian markets due to US-India trade tensions, weak company earnings, and a depreciating rupee. Key export sectors such as textiles, gems and jewelry will begin to face headwinds now that banks are tightening loan availability. Exporters are trying to adapt, trying to find new markets to ship to, relocate some production, or buy businesses in the US.
Industry associations are calling on the government for additional assistance related to aid, and loans. The Reserve Bank of India has sold $5B from its reserve accounts in an attempt to stop the rupee from falling any further, after it hit ₹87.89 per US dollar. A lower rupee could help exporters but also creates costlier imports which could lead to higher prices in India. If no trade deal is reached soon, India will have to gear up for more economic trouble ahead.
