Indian financial markets tumbled on Friday as U.S. trade tensions escalated, with President Donald Trump’s adviser Peter Navarro calling India the “Maharaja” of tariffs and accusing New Delhi of running a “profiteering scheme” through Russian oil imports. The harsh rhetoric comes days before punitive 50% tariffs on Indian goods are set to take effect on August 27.
The BSE Sensex plunged 694 points to close at 81,306.85, while the Nifty50 fell 214 points to 24,870.10, ending a six-day winning streak. The Indian rupee also weakened, trading at 87.44 against the dollar, marking a 16 paisa decline for the day.
Tariff Escalation Reaches Critical Point
Speaking outside the White House, Navarro defended the administration’s decision to impose what he called the highest tariffs on any U.S. trading partner. “Prior to Russia’s invasion of Ukraine in February 2022, India virtually bought no Russian oil…The percentage has now gone up to 35 percent,” Navarro told reporters. He dismissed India’s energy security arguments, claiming the country “doesn’t need the oil” and is instead operating “a laundromat for the Kremlin.”
The tariffs represent a doubling of previous levies, combining an initial 25% “reciprocal tariff” with an additional 25% penalty specifically targeting India’s Russian oil purchases. The measures affect approximately $87 billion worth of Indian exports to the U.S., with sectors including textiles, gems and jewelry, and chemicals facing the heaviest impact.
Market Disruption and Currency Pressure
Export-oriented sectors bore the brunt of Friday’s sell-off, as investors digested the implications of the steep tariff increases. The Reserve Bank of India intervened to prevent the rupee from approaching its record low of 87.95, according to traders.
Foreign institutional investors have already withdrawn approximately ₹25,000 crore from Indian equities over eight consecutive days of selling, anticipating the tariff impact.
In response to U.S. pressure, both Russia and China have extended support to India. Russian embassy officials called the American tariffs “inappropriate” and welcomed Indian goods in Russian markets. Meanwhile, Chinese Ambassador Xu Feihong wrote on X that “China firmly stands with India to uphold the multilateral trading system”.
External Affairs Minister S. Jaishankar has emphasized strengthening trade ties with Russia, telling Russian companies that India’s rapidly growing economy presents a “golden opportunity” for investment. India maintains its energy policy is based on national interests and strategic autonomy, rejecting U.S. criticism of its continued Russian oil purchases.
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