The Indian stock market experienced a notable downturn on August 28, 2025, with key indices registering declines as new United States tariffs on imported goods came into effect. The benchmark BSE Sensex fell by 0.59%, closing at 80,315.2 points, while the Nifty 50 index saw a decrease of 0.51%, ending the day at 24,583.75 points. This market reaction reflects global investor apprehension regarding escalating trade disputes.
The U.S. Department of Homeland Security has increased tariffs on Indian goods from 25% to 50%, citing India's continued engagement in purchasing Russian oil. This policy shift has directly impacted market capitalization, with companies listed on the BSE experiencing a loss of ₹2 lakh crore, reducing their total market value from ₹449 lakh crore to ₹447 lakh crore. Analysts anticipate sustained market pressure, particularly affecting sectors heavily reliant on exports.
Foreign portfolio investors have withdrawn over $700 million amidst the prevailing sell-off, signaling a cautious outlook. In response, the Indian government is exploring strategic measures, including diversifying export destinations to reduce dependence on the U.S. market and forging new trade agreements. The Global Trade Research Initiative (GTRI) estimates that these tariffs could lead to a substantial drop in Indian exports to the U.S., potentially from $86.5 billion to around $50 billion by 2026.
Sectors such as textiles, gems, jewelry, seafood, and leather are particularly vulnerable, with projections indicating a possible 70% decline in exports from these areas, which could impact hundreds of thousands of jobs. Some reports suggest that companies are already halting production due to diminished cost competitiveness. While major sectors like pharmaceuticals and electronics are currently exempt from these new tariffs, the broader economic implications are a cause for concern, as the U.S. remains a crucial export market for India.