Full Breakdown
Impact of Rising US Tariffs on Indian Exports
11/30/2025, 12:27:57 PM
Sharp Decline in Exports to the US
India's exports to the United States have experienced a significant downturn, plummeting by 28.5% from May to October 2025. According to the Global Trade Research Initiative (GTRI), the value of shipments fell from USD 8.83 billion to USD 6.31 billion during this period, primarily due to aggressive tariff increases imposed by the US government. Tariffs escalated from 10% in April to 50% by late August, making Indian goods among the most heavily taxed of any US trading partner. In contrast, China faced tariffs of approximately 30%, while Japan's tariffs were around 15%.
Breakdown of Export Categories
The GTRI report categorizes Indian exports into three segments: tariff-exempt items, uniform global tariff items, and labour-intensive products. Tariff-exempt items, including smartphones, pharmaceuticals, and petroleum products, constituted 40.3% of October exports but still saw a decline of 25.8%, dropping from USD 3.42 billion in May to USD 2.54 billion in October. Uniform global tariff items, such as iron, steel, and auto parts, represented 7.6% of shipments and decreased by 23.8%. However, the most significant impact was felt in labour-intensive sectors, including gems and jewellery, textiles, and seafood, which faced the maximum tariff rate of 50%. Exports in this category plummeted by 31.2%, resulting in a loss of nearly USD 1.5 billion.
Calls for Policy Action
In light of these developments, the GTRI has urged the Indian government to expedite the operationalization of the Export Promotion Mission, which was announced in March 2025 and approved in November 2025. The mission aims to enhance India's export competitiveness, particularly for micro, small, and medium enterprises (MSMEs) and labour-intensive sectors. GTRI has emphasized the need for clear guidelines and timely disbursals to ensure the mission's success, as nearly eight months into the fiscal year, no schemes are operational.
Criticism of Current Trade Policies
Critics argue that the current tariff regime has exposed structural vulnerabilities in India's export basket, highlighting the heavy reliance on specific sectors and markets. The GTRI has pointed out that the additional 25% tariff related to Russia on Indian goods should be removed to alleviate the burden on exporters. They contend that without addressing these issues, India's export competitiveness will continue to suffer.
What's Next for Indian Exports?
As Indian exporters navigate the challenges posed by rising US tariffs, there is a growing emphasis on diversifying trade relationships. The Department of Commerce has advised exporters to maintain pricing standards rather than resorting to drastic price cuts to enter new markets. The GTRI's recommendations include negotiating with the US to remove additional tariffs and operationalizing the Export Promotion Mission to restore competitiveness.
Verbatim Quotes
- “Nearly eight months into the fiscal year, no schemes are operational, while longstanding programmes such as the Market Access Initiative and the Interest Equalisation Scheme have made no payments this year,” — GTRI
- “The think tank believes that removing the extra tariff could effectively halve the US tariff burden to 25%, providing crucial relief to Indian exporters.” — GTRI
The current situation underscores the urgent need for India to reassess its trade strategies and seek new markets to mitigate the impact of US tariffs on its economy.
