Industry body Assocham has said that the escalation of global trade protectionist measures into a full-scale global trade war will damage the Indian economy as well. According to Assocham, a full-scale global trade war will impact the country's exports and enlarge its current account deficit (CAD). Commenting on the issue, an Assocham Official told the media, "Tensions in the market look quite justified, as Trump's move to levy tariff on trading partners could lead to a further retaliation against the US." "Though India may not get much of a direct impact, the collateral damage could be in the form of adverse impact on the overall sentiment," he added.
“A further erosion in "market confidence" can also lead to an outflow of portfolio investment thereby "taking a toll on the dollar rates", it said. Besides, as the US dollar is used as a safe haven in the midst of global uncertainties, its increased demand would put pressure on the Indian currency along with those of the other currencies of the emerging markets, Assocham added.