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ABSTRACT: The imposition of steep U.S. tariffs--raised to 50% in August 2025--has generated notable volatility in India's capital and export markets, particularly affecting sectors heavily dependent on American demand. India's benchmark indices, Sensex and Nifty, witnessed an immediate correction following the tariff announcement, accompanied by foreign investment outflows and a record depreciation of the rupee to INR88.78 per U.S. dollar. Export-oriented industries such as textiles, leather, gems and jewellery, and automobiles reported significant declines in turnover, severely impacting MSMEs. In contrast, tariff-exempt sectors like pharmaceuticals, IT services, FMCG, electronics, and semiconductors showed resilience, reflecting India's relatively low dependence on U.S. exports, which account for only about 2-2.5% of GDP. Despite external shocks, strong domestic consumption, supportive government policies, and a stable base of domestic investors have cushioned market volatility. India's efforts to safeguard its trade "red lines," as emphasized by the External Affairs Minister, underline the need for balanced and mutually respectful negotiations with the U.S. Amid these challenges, proactive state-level initiatives--particularly in Uttar Pradesh--demonstrate India's strategic shift toward market diversification and self-reliance. The new Export Promotion Policy 2025-30, ODOP initiatives, logistics support, financial incentives, and infrastructure expansion aim to strengthen local industries, empower artisans, and build a resilient export ecosystem. These domestic-focused, self-sustaining measures reflect the emergence of a Swadeshi Market capable of withstanding tariff pressures while advancing India's broader economic ambitions, including the vision of a $1-trillion state economy. .