New Delhi: The United States’ decision to impose a 50 percent tariff on Indian exports has triggered widespread concern among Indian exporters, with key sectors such as leather, textiles, gems and jewellery, footwear, shrimp, and chemicals bracing for a significant impact. The move comes in response to India’s continued purchase of Russian oil.
US President Donald Trump announced an additional 25 percent tariff on Indian imports, which will be added to an existing 25 percent duty. The new tariffs will be implemented in two phases beginning August 7 and further escalating on August 27. Notably, only India has been targeted under these measures while other major importers of Russian energy such as China and Turkey have so far avoided similar penalties.
Industry estimates suggest that the steep increase in duties could make Indian goods far more expensive in the American market, potentially slashing exports by 40 to 50 percent. The tariff impact on sectors like organic chemicals, carpets, apparel, diamonds, machinery, and furniture is expected to be severe, with some goods now facing more than 50 percent in total duties.
In 2024–25, bilateral trade between India and the US reached 131.8 billion dollars with Indian exports accounting for 86.5 billion. The sectors facing the brunt of the new tariff structure include textiles and clothing worth over 10 billion, gems and jewellery at 12 billion, shrimp at 2.24 billion, leather and footwear at 1.18 billion, chemicals at 2.34 billion, and electrical and mechanical machinery at around 9 billion.
The seafood industry is especially concerned. India’s shrimp exports already attract anti-dumping and countervailing duties of over 8 percent. With the additional 25 percent tariff, the effective duty will rise to 33.26 percent from August 7. Exporters warn this will make Indian shrimp uncompetitive in the US market, especially compared to Ecuador which enjoys a much lower tariff of 15 percent.
The Confederation of Indian Textile Industry expressed deep concern over the new tariff policy, calling it a major blow to exporters already struggling with global demand fluctuations. The US is India’s largest market for textile and apparel exports. Industry leaders say the increased cost burden could render Indian products unviable, especially in comparison to competitors from countries with lower or no additional tariffs.
Jewellery exporters have raised similar alarms. With nearly 55 percent of India’s jewellery exports going to the US, companies are seeing orders put on hold as buyers reconsider sourcing decisions. Margins in MSME-led industries are already tight and absorbing these cost escalations is proving difficult.
Exporters in leather, chemicals, and machinery sectors echoed the concern and called for immediate government intervention. Many are now exploring alternative markets to maintain momentum and prevent further losses.
While trade talks between India and the US are underway, with both sides aiming to conclude an interim agreement by October or November, there are still sticking points—particularly in agriculture, dairy, and genetically modified products where India remains firm.
New Delhi has strongly condemned the US decision, describing the tariffs as unfair and discriminatory. Officials also criticized the US for double standards, pointing out that it continues to import certain materials from Russia while penalizing India for doing the same.
President Trump, when asked why India was singled out, responded vaguely and hinted at more secondary sanctions to come. His remark suggesting that India could buy oil from Pakistan has also drawn sharp reactions in New Delhi.
Observers warn that this aggressive trade stance risks undermining decades of diplomatic progress and economic cooperation. Some fear it could push India into a corner, where it may need to reduce Russian oil imports without publicly appearing to cave in to pressure.
Analysts believe India now faces the challenge of defending its strategic autonomy while managing its crucial trade relationship with the US. The coming weeks will be critical in determining whether diplomacy can prevail or whether the tariffs will escalate into a deeper economic rift.
