New Delhi: The imposition of a 25 per cent US tariff will impact about half of India’s over USD 86 billion worth of exports to America, government sources said Friday.
The sectors which could bear the brunt of 25 per cent duty include textiles/ clothing (10.3 billion), gems and jewellery (12 billion), shrimp (USD 2.24 billion), leather and footwear (USD 1.18 billion), animal products (USD 2 billion), chemicals (2.34 billion), and electrical and mechanical machinery (about USD 9 billion).
They said that about half of the goods exported from India to the US are in the exemption category (such as pharma and electronic goods), so, the impact will be only on the remaining half.
“More than half of India’s exports to the US will not be impacted by the duty. Due to the Section 232 exemption of the US, only exports worth about USD 48 billion would be impacted with these tariffs,” they said, adding the remaining exports will have a little impact on a country with a GDP of about USD 4 trillion and a consumer base of 140 crore.
In 2024-25, the bilateral trade between India and the US stood at USD 131.8 billion (USD 86.5 billion exports and USD 45.3 billion imports).
According to think tank GTRI, the 25 per cent tariffs will not be applicable on the exempted categories, including finished pharmaceutical drugs, active pharmaceutical ingredients (APIs), and other key drug inputs; energy products such as crude oil, refined fuels, natural gas, coal, and electricity; critical minerals; and a wide range of electronics and semiconductors, like computers, tablets, smartphones, solid-state drives, flat panel displays, and integrated circuits.
According to an exporter, apparel sector that exports USD 5.33 billion worth of goods to the US will be the most impacted.
Sudhir Sekhri, Chairman, AEPC, said: “We request immediate government intervention to offset this huge setback. Exporters have their back against the wall and will have to sell below cost to keep their factories running and avoid mass layoffs.”
Kanpur-based Growmore International Ltd MD Yadvendra Singh Sachan said that exporters should use this opportunity to explore new markets.
“We need to diversify our exports,” Sachan said.
Federation of Indian Export Organizations (FIEO) Director General Ajay Sahai said that the US order provides relaxation for goods in transit and those loaded on ship for final sailing to the US by August 7.
US President Donald Trump unveiled sweeping new tariffs on dozens of countries, including 25 per cent duties for goods from India, marking a new era of American protectionism that triggered fresh tensions and concerns over a much wider disruption in the global trade landscape.
The US president signed an executive order that raised tariffs for over five dozen countries, with Washington’s negotiations for trade deals going down to the wire ahead of the August 1 deadline.
In the Executive Order titled ‘Further Modifying The Reciprocal Tariff Rates’, Trump announced tariff rates for nearly 70 nations.
With America, India had a trade surplus (the difference between imports and exports) of USD 41 billion in 2024-25. It was USD 35.32 billion in 2023-24 and USD 27.7 billion in 2022-23.
In 2024, India’s main exports to the US included drug formulations and biologicals (USD 8.1 billion), telecom instruments (USD 6.5 billion), precious and semi-precious stones (USD 5.3 billion), petroleum products (USD 4.1 billion), vehicle and auto components (USD 2.8 billion), gold and other precious metal jewellery (USD 3.2 billion), ready-made garments of cotton, including accessories (USD 2.8 billion), and products of iron and steel (USD 2.7 billion).
Imports included crude oil (USD 4.5 billion), petroleum products (USD 3.6 billion), coal, coke (USD 3.4 billion), cut and polished diamonds (USD 2.6 billion), electric machinery (USD 1.4 billion), aircraft, spacecraft and parts (USD 1.3 billion), and gold (USD 1.3 billion).
India’s merchandise exports to the US rose 22.8 per cent to USD 25.51 billion in the April-June quarter this financial year, while imports rose 11.68 per cent to USD 12.86 billion.
PTI
