Trump slaps extra 25 per cent tariff on Indian goods, triggered by Russian oil imports

A sharp drop in US-bound shipments could drag India’s GDP growth below six per cent this year, down from the central bank’s 6.5 per cent forecast, said Sakshi Gupta of HDFC Bank.

India's rupee weakened in offshore non-deliverable forwards market while stock futures fell marginally after the announcement.

"While markets have already started pricing in the risk of a sharp tariff hike, a near-term knee-jerk reaction is inevitable unless there’s swift clarity or a breakthrough in negotiations," said Mayuresh Joshi, head of equity research for India at Willian O' Neil.

Trump’s move follows five rounds of inconclusive trade talks, which stalled over US demands for wider access to Indian agriculture and dairy markets. India's refusal to cut Russian oil imports - which hit a record $52 billion last year - ultimately triggered the tariff escalation.

US and Indian officials told Reuters a mix of political misjudgement, missed signals and bitterness scuttled trade deal negotiations between the world's biggest and fifth-largest economies, whose bilateral trade is worth over $190 billion.

(Reporting by Doina Chiacu and Andrea Shalal, Manoj Kumar, Ira Dugal, Sarita Chaganti Singh; editing by Caitlin Webber, Deepa Babington and Mark Heinrich)