Islamabad: A prominent business leader has warned that the United States' decision to impose an additional 25% tariff on Indian exports could severely damage India's economy and challenge Prime Minister Narendra Modi's political stability. The tariffs, aimed at penalizing India for purchasing discounted Russian oil, have raised total duties on Indian goods to 50%.

Shahid Rashid Butt, the former president of the Islamabad Chamber of Commerce and Industry, highlighted the potential reduction in demand for Indian products in US markets due to increased costs. This drop in demand could harm India's economic growth and lead to higher unemployment rates. Conversely, Butt noted that countries like Pakistan might see this as an opportunity to increase their export volumes.

The US argues that India's oil purchases support Russia's economy and, by extension, its involvement in the Ukraine conflict. India has decried the tariffs as being unfair, but economic projections indicate that the impact could be significant, with 55% of Indian exports, including textiles, pharmaceuticals, and agricultural goods, potentially affected. Analysts suggest this could result in India's GDP growth dipping below 6% in 2025.

In response, India is engaging in diplomatic dialogues to mitigate the repercussions of the US decision. Butt emphasized the necessity for India to adopt policies focused on peace and collaboration within South Asia, urging for a shift from regional dominance to collective development.

The unfolding situation will test India's strategic choices, with potential implications for regional trade, alliances, and development. The geopolitical and economic outcomes could reshape priorities within the South Asian Association for Regional Cooperation (SAARC) region and beyond.