The US accounted for around 20 per cent of India’s USD 437.42 billion worth of goods exports in 2024-25 and has been India’s largest trading partner since 2021-22. In 2024-25, bilateral trade in goods stood at USD 131.8 billion (USD 86.5 billion in exports and USD 45.3 billion in imports)
Exporters have urged the government to announce measures to mitigate the impact. Representational pic
The steep 50 per cent tariffs on Indian goods entering the United States of America (USA) are expected to severely affect exports and job creation in labour-intensive sectors such as shrimp, apparel, leather, and gems and jewellery, exporters said.
The imposition of an additional 25 per cent penalty on India, over and above the existing 25 per cent tariffs, will disrupt the flow of Indian goods to its largest export market.
The US accounted for around 20 per cent of India’s USD 437.42 billion worth of goods exports in 2024-25 and has been India’s largest trading partner since 2021-22. In 2024-25, bilateral trade in goods stood at USD 131.8 billion (USD 86.5 billion in exports and USD 45.3 billion in imports).
“The 50 per cent tariff is like an economic sanction. It would lead to closure of units and job cuts,” an exporter from the leather sector said.
Mithileshwar Thakur, Secretary General, AEPC (Apparel Export Promotion Council), said the textiles sector, with exports of USD 10.3 billion, is among the worst-affected.
“The industry was reconciled to the 25 per cent reciprocal tariff announced by the USA, as it was prepared to absorb a part of the tariff increase. But, the additional burden of another 25 per cent...has effectively driven the Indian apparel industry out of the US market as the gap of 30-31 per cent tariff disadvantage vis-a-vis major competing countries like Bangladesh, Vietnam, Sri Lanka, Cambodia and Indonesia is impossible to bridge,” he stated.
Gems and Jewellery Export Promotion Council (GJEPC) Chairman Kirit Bhansali also warned of the impact, citing the sector’s dependence on the US market.
“For cut and polished diamonds, half of India’s exports are US-bound. With this tariff hike, the entire industry may come to a standstill, placing immense pressure on every part of the value chain, from karigars (artisans) to large manufacturers,” he said, adding that competing hubs such as Turkiye, Vietnam and Thailand continue to enjoy significant advantages, making Indian products relatively less competitive in the US market due to India’s 50 per cent tariff.
An official from the diamond sector said that diamond cutting and polishing sustains lakhs of jobs across Gujarat’s hinterland, particularly in Surat, Navsari, Bhavnagar and Jasdan.
A Kolkata-based seafood exporter said India’s shrimp will become “super” expensive in the US, hitting competitiveness.
“We are already facing huge competition from Ecuador, as it has only a 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 50 per cent, the duty will be significantly high,” he said.
Similarly, a leather exporter noted that some companies have orders for 2-3 months, but US firms are demanding about a 20 per cent discount to retain them.
“Considering the 50 per cent tariff for India, if the discount is not accepted, orders are kept fully on hold or cancelled. Also, if a discount is not given, no new orders will be placed,” he said, adding that firms doing business with the US anticipate a 50 per cent reduction/retrenchment in workforce, supervisors, staff and management due to loss of US business.
Economic think tank GTRI said the US tariffs will affect 66 per cent of India’s USD 86.5 billion exports to America.
“The United States’ new tariff regime, effective August 27, 2025, marks one of the most severe trade shocks India has faced in recent years. With over two-thirds of India’s USD 86.5 billion exports to the US now subject to prohibitive 25-50 per cent duties, critical labour-intensive sectors such as textiles, gems and jewellery, shrimp, carpets, and furniture face sharp declines in competitiveness and employment,” GTRI Founder Ajay Srivastava said.
He added that India’s exports to the US are set to fall steeply to about USD 49.6 billion in FY2026 under Washington’s new tariff regime.
Exporters have urged the government to announce measures to mitigate the impact. FIEO President SC Ralhan suggested a moratorium on payment of principal and interest for loans up to one year, automatic enhancement of existing limits by 30 per cent, and collateral-free lending under the Emergency Credit Line Guarantee Scheme (ECLGS) to ease the stress on affected companies.
Ralhan also emphasised expanding PLI schemes, enhancing infrastructure, investing in cold-chain/storage assets to strengthen competitiveness, and aggressively pursuing market diversification through accelerated FTAs with the EU, Oman, Chile, Peru, GCC, Africa, and other Latin American countries, with early-harvest provisions for labour-intensive sectors.
“Swift, coordinated action among exporters, industry bodies, and government agencies is needed to protect livelihoods, reinforce global trade links, and navigate this turbulent phase,” he said.
(With PTI inputs)
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