With tariffs soaring to 50%, the U.S. hits the core of India's export engine. New Delhi's next move could decide the fate of a looming trade crisis.

In a move that threatens to strain one of the most strategically important bilateral relationships, the United States has doubled tariffs on Indian exports to as high as 50%, citing India's continued purchases of Russian oil. This sudden escalation is expected to hit India's $87 billion export sector hard, particularly garments, gems and jewelry, footwear, chemicals, and other labor-intensive goods.

The decision comes after five failed negotiation rounds, with Washington reportedly unwilling to offer India the same tariff caps-around 15%-granted to allies like Japan and the European Union. Indian officials, blindsided by the final notice, now face pressure to protect millions of small exporters and up to 2 million jobs, many located in Prime Minister Narendra Modi's home state of Gujarat.

A senior Indian government source indicated that New Delhi is preparing financial assistance packages for impacted industries and exploring alternative export markets. Trade pacts with the United Kingdom, Australia, the UAE, and European nations are now seen as potential lifelines, especially for textile and leather exporters.

Washington justified the measure by stating that India's continued energy trade with Russia indirectly funds the war in Ukraine-a claim New Delhi has called hypocritical, pointing to ongoing Western business ties with Moscow. India's junior foreign minister responded firmly, emphasizing that energy security remains a non-negotiable priority, and that the country will "purchase energy sources from whichever country benefits us."

While Indian stock markets were closed for a Hindu festival when the tariffs took effect, the impact had already been felt. Equity benchmarks experienced their worst session in three months earlier this week, and the rupee fell for a fifth consecutive day, hitting a three-week low.

Export groups estimate that 55% of India's exports to the U.S. are now affected, eroding their competitiveness against rivals like Vietnam, Bangladesh, and China. Economists are urging the Indian government to allow the rupee to depreciate and adopt a less protectionist, more trade-oriented approach to spur demand. Proposals include a loan moratorium for exporters, expansion of low-interest credit, and relaxing banking norms to ease financial strain.

There are broader implications too. Sustained tariffs at these levels could undermine India's position as a manufacturing alternative to China, especially in sectors like smartphones and electronics. However, some analysts remain cautiously optimistic, pointing to India's diversified export base, robust domestic demand, and resilient corporate earnings as buffers.

Despite the current rupture, both governments have expressed a commitment to long-term cooperation, especially amid shared concerns about regional security and China's growing influence. Whether diplomacy can prevail in the short term remains uncertain, but what is clear is that this latest tariff hike marks a decisive turning point in U.S.-India trade relations.