The United States has officially imposed a 25% tariff on a wide range of Indian exports. President Donald Trump’s administration claims the move is in response to India’s ongoing oil trade and defense ties with Russia.
This action follows failed trade talks between the two countries last month. The final phase of the tariff hike will take effect on August 27.
Experts say the tariffs could deeply affect India’s trade with the US, which is its largest export market. While countries like China and Turkey, which also buy oil from Russia, haven’t been targeted, India is facing this penalty alone.
Which Indian Sectors Are Affected?
India exported goods worth $86.5 billion to the US in FY 2024–25. The sectors most impacted include:
- Textiles and garments: $10.3 billion
- Gems and jewellery: $12 billion
- Leather and footwear: $1.18 billion
- Chemicals: $2.34 billion
- Machinery and electricals: $9 billion
- Marine products: $2.24 billion
Major Indian firms like Arvind Ltd, Trident, Welspun, and others in these sectors could see a sharp dip in orders.
New Tariff Rates (Including Existing Duties)
According to GTRI (Global Trade Research Initiative), the combined tariff rates now stand at:
- Knitted garments: 63.9%
- Woven apparel: 60.3%
- Made-up textiles: 59%
- Organic chemicals: 54%
- Gems, diamonds, gold: 52.1%
- Carpets & furnishings: 52.9%
- Furniture: 52.3%
- Machinery: 51.3%
These increases make Indian goods much more expensive for US buyers, putting pressure on suppliers and reducing India’s competitiveness.
Exporters Speak Out
Reactions from Indian exporters have been strong and concerned:
Yogesh Gupta of seafood exporter Megaa Moda said, “We are already facing huge competition from Ecuador…After this 25 per cent, the duty will be 33.26 per cent from August 7.”
CITI (Confederation of Indian Textile Industry) said, “The US tariff announcement… is a huge setback for India’s textile and apparel exporters… and will significantly weaken our ability to compete effectively.”
Colin Shah, MD of Kama Jewelry, added, “Many export orders have already been put on hold… this additional blow could force exporters to lose long-standing clients.”
Smaller exporters in Surat, Ludhiana, Tiruppur, and Kanpur, especially MSMEs, are expected to be hit the hardest.
What About Pharma, Steel, and Solar?
Even though pharmaceuticals are not directly affected, Indian exporters expect indirect issues, like stricter regulations and pricing pressure.
Other sectors that could suffer:
- Auto parts: $2.2 billion exports to the US
- Steel: $6.2 billion
- Aluminium: $860 million
- Solar hardware: Almost entirely dependent on the US
Companies like Waaree, Tata Power Solar, and Adani Solar could lose significant business if access to the US market is reduced.
How Big Is the Overall Impact?
According to PHD Chamber of Commerce and Industry (PHDCCI), the effect is limited to:
- Only 1.87% of India’s global exports
- About 0.19% of India’s GDP
- Total projected impact: $8.1 billion, including:
- Engineering: $1.8 billion
- Gems & jewellery: $932 million
- Apparel: $500 million
To cushion the blow, PHDCCI suggests exploring new markets, bundling products, and partnering with US firms to make goods locally.
Can India and the US Strike a Deal?
India is in talks to have a phased trade agreement with US by October or November. Although topics such as agriculture and dairy imports could be leading to a delay.
Exporters are cautious yet hopeful. Managing Director of Growmore International Yadvendra Singh Sachen said, “Exporters should look for new markets to maintain export growth.”
