 "Representational image. File image/Reuters")
US President Donald Trump’s punitive tariffs on India have taken effect today, meaning that most Indian goods exported to America will face 50 per cent duties. Earlier, the tariff had amounted to 25 per cent, but it was later raised to 50 per cent on India’s import of Russian oil.
The calculation behind the tariff math is 25 per cent taxes plus a 25 per cent penalty that has been imposed in response to “threats to the United States by the government of the Russian Federation”, and penalises India for buying Russian oil directly or indirectly.
The new duties will apply to goods entering the US for consumption or withdrawn from warehouses for consumption from 12:01 am EDT on Wednesday or 9:31 am IST, according to the Homeland Security notice.
On Tuesday, the Department of Homeland Security issued a notification laying down the details of the tariffs. The notification specifically targeted India and did not refer to China, despite Beijing importing more Russian oil than India.
Which sectors will be affected?
Nearly half of India’s exports, worth $87.3 billion, will be hit by the 50 per cent tariffs. The sectors that will be affected include textiles, apparel, gems and jewellery, seafood, leather goods, steel, aluminium, copper, organic chemicals and handicrafts.
Approximately 30 per cent of exports to the US, worth $27.6 billion in FY25, will remain duty-free, as categories such as pharmaceuticals, electronics, and petroleum products have been exempted from Trump’s tariffs. Meanwhile, around 4 per cent of exports, primarily auto parts, will be subject to a 25 per cent tariff.
India intensifies exports
An official from the Ministry of Commerce told Reuters that the government has “no hopes for any immediate relief or delay in US tariffs.” However, the government has readied mechanisms to provide financial assistance to exporters who are affected by Trump tariffs, the official added.
Authorities are also encouraging exporters to diversify to alternative markets, including China, Latin America and the Middle East. “The government has identified nearly 50 countries for increasing Indian exports, particularly of textiles, food processed items, leather goods, marine products,” the official said.