 "Textiles, gems, chemicals... The sectors most affected by Trump's 50% tariffs on India")
The United States’ sweeping tariff to the tune of 25 per cent on a wide range of Indian exports began today.
US President Donald Trump’s administration has imposed an additional 25 percent tariff on Indian goods, citing India’s continued oil trade and military cooperation with Russia as justification.
Trump announced the initial tariffs last month after trade agreement talks between both the nations stalled.
The final stage of the tariff increase — the additional 25 per cent — will be implemented from August 27.
Industry leaders, policy experts, and exporters have warned that this move could significantly alter India’s trade equation with its largest export market.
While Washington has not imposed similar penalties on other major buyers of Russian oil such as China or Turkey, India has become the sole target of this specific tariff-based retaliation.
Which Indian export sectors have been hit?
The escalation in duties will affect a broad swathe of Indian export industries, particularly those heavily reliant on the US market.
According to figures from the Ministry of Commerce, India exported goods worth $86.5 billion to the United States in FY2024-25.
The sectors most exposed to the hike include textiles and garments, gems and jewellery, leather and footwear, marine products, chemical goods, machinery, and electrical equipment.
Exports in the textile and apparel segment alone are estimated at $10.3 billion annually to the US.
This includes cotton towels, readymade garments, home textiles, and fashion apparel, with Indian companies like Arvind Ltd, Welspun Living, and Trident having a significant presence in the American market.
Gems and jewellery exports, which have long been a pillar of Indian merchandise trade, account for nearly $12 billion worth of shipments to the US annually.
Leather and footwear contribute around $1.18 billion, while chemicals and chemical products constitute another $2.34 billion in exports.
Electrical and mechanical machinery exports, a growing segment, are valued at approximately $9 billion.
Shrimp and other seafood items also make up a considerable $2.24 billion in outbound shipments to the American market.
Who pays what?
Industry think tank GTRI has mapped out the likely tariff burdens across several export categories, and the numbers paint a challenging picture.
With the new levies in place, the duties will stack up to:
Knitted garments: 63.9 per cent
Woven apparel: 60.3 per cent
Made-up textiles: 59 per cent
Organic chemicals: 54 per cent
Diamonds, gold, and related products: 52.1 per cent
Carpets and floor coverings: 52.9 per cent
Furniture, bedding, and mattresses: 52.3 per cent
Machinery and mechanical appliances: 51.3 per cent
These are over and above existing duties already applied on Indian products by US Customs. The immediate result is a substantial increase in the landed cost of Indian goods, which many buyers are unwilling to absorb.
How have exporters reacted to the tariffs?
Industry reactions have been swift and pointed. Yogesh Gupta, Managing Director of Kolkata-based seafood firm Megaa Moda, told PTI how the move disproportionately affects shrimp exporters, “We are already facing huge competition from Ecuador as it has only 15 per cent tariff. Indian shrimp already attracts a 2.49 per cent anti-dumping duty and a 5.77 per cent countervailing duty. After this 25 per cent, the duty will be 33.26 per cent from August 7.”
Similarly, the textile sector, which is already grappling with soft global demand and price volatility, finds itself in a precarious position.
The Confederation of Indian Textile Industry (CITI) expressed its apprehension, “The US tariff announcement of August 6 is a huge setback for India’s textile and apparel exporters as it has further complicated the challenging situation we were already grappling with and will significantly weaken our ability to compete effectively vis-à-vis many other countries for a larger share of the US market.”
Colin Shah, Managing Director of Kama Jewelry, shared concerns over lost competitiveness, “Many export orders have already been put on hold as buyers reassess sourcing decisions in light of higher landed costs. For a large number of MSME-led sectors, absorbing this sudden cost escalation is simply not viable. Margins are already thin, and this additional blow could force exporters to lose long-standing clients.”
The impact is particularly harsh for MSMEs and family-run businesses that dominate India’s export clusters in cities like Surat, Tiruppur, Ludhiana and Kanpur.
What about strategic sectors like pharma & steel?
While much of the focus has been on consumer-facing exports, strategic sectors are also feeling the heat.
India’s pharmaceutical exports to the US touched $9.8 billion in FY25, up from $8.1 billion the previous year. Although drugs are not directly affected by the new tariff structure, exporters are bracing for indirect repercussions in the form of regulatory hurdles and scrutiny.
American buyers could invoke concerns over intellectual property rights or product pricing to negotiate better terms or shift orders to competitors.
In the auto component industry — which sent out $2.2 billion worth of goods to the US last year — the worry is that the tight cost structures and precision-based manufacturing make these exports particularly vulnerable.
Even a modest decline in orders could force Tier II and Tier III suppliers to scale down production, with corresponding effects on employment.
Indian steel exports to the United States, worth $6.2 billion in FY25, also face a complicated future. Although diversified, the sector relies on US infrastructure demand.
A significant portion of aluminium exports — about $860 million worth — could be caught in the same web of high duties and trade barriers, possibly including anti-dumping probes under Section 232 of US trade law.
Another affected segment is solar energy hardware. According to the Institute for Energy Economics and Financial Analysis (IEEFA), nearly all of India’s photovoltaic module exports were directed to the United States in FY24.
Companies like Waaree, Adani Solar, and Tata Power Solar, which have expanded capacity to cater to American demand, now face serious revenue concerns. A sudden loss of market access or tariff hikes could render their growth projections untenable.
What do the US tariffs mean for the Indian economy?
While sectoral impact appears severe, a broader analysis by the PHD Chamber of Commerce and Industry (PHDCCI) offers a somewhat tempered view. The Chamber estimates that the tariffs will affect just 1.87 per cent of India’s global merchandise exports and have a negligible 0.19 per cent impact on GDP.
Based on 2024-25 data, the total expected export impact stands at $8.1 billion. This includes:
Engineering goods: $1.8 billion
Gems and jewellery: $932 million
Ready-made garments: $500 million
To mitigate the blow, PHDCCI has laid out several steps. These include increased focus on market expansion, diversification to newer regions, and bundling strategies (like selling textiles with accessories) to retain competitiveness.
The Chamber also advocated for leveraging the Indian diaspora and cultural outreach to boost volumes and reduce dependency on single markets.
One of the most pragmatic recommendations involves setting up joint ventures with US-based firms to manufacture high-duty items domestically, thereby transforming export activities into domestic services and intellectual property-driven business models.
Will India and the US reach a trade deal soon?
The two countries are working toward a phased bilateral trade agreement (BTA), with expectations to complete the first leg by October or November this year.
While the talks offer some hope for tariff relief, sources suggest that India is unwilling to cede ground on contentious issues such as agricultural imports, dairy sector protection, and genetically modified food products.
These sticking points have long delayed comprehensive trade cooperation between the two nations.
Nevertheless, exporters remain hopeful that a deal — even a partial one — could lead to temporary exemptions or duty relaxations for key sectors.
Speaking to PTI, Yadvendra Singh Sachan, MD of Growmore International Ltd, suggested that Indian businesses should not remain entirely dependent on negotiations alone. “Exporters should look for new markets to maintain export growth.”
This sentiment echoes a growing realisation within the export community that diversification — in terms of both products and markets — is essential for long-term resilience.
From shrimp farmers in West Bengal to auto component makers in Pune and apparel exporters in Tiruppur, the cost pressures will be felt sharply over the coming months.
While larger firms may absorb some shocks, smaller players will need government support.
With inputs from agencies
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