The United States has started implementing 50% tariffs on most Indian goods, a move that could severely cut India’s exports to the American market in 2025-26. Trade experts warn that India’s merchandise exports to the US may fall by 40–45% compared to 2024-25, threatening jobs in labour-intensive sectors like textiles, gems, jewellery, shrimp, carpets and furniture.
According to the Global Trade Research Initiative (GTRI), India’s exports to the US could decline to $49.6 billion in FY26 from $87 billion in FY25. Nearly two-thirds of exports by value are covered by the 50% tariff, while 30% of exports such as pharmaceuticals, electronics and petroleum products remain duty free. Another 4% of exports, mainly auto parts, face a 25% tariff.
The new tariffs include a 25% duty announced in July 2025, plus an additional 25% penalty announced in August linked to India’s purchase of Russian oil and defence imports from Moscow.
Sectors at Risk
Exports hardest hit include:
- Textiles and apparel
- Gems and jewellery
- Shrimps and marine products
- Carpets and home textiles
- Furniture, handicrafts, and leather goods
For shrimp exporters, the US accounts for nearly half of revenues. Gems and jewellery exporters, with $10 billion worth of annual exports to the US, say tariffs will disrupt supply chains and endanger thousands of jobs.
Home textiles and carpets, where the US absorbs up to 60% of shipments, are also expected to see steep sales declines.
Calls for Government Support
Industry groups, including the Gem and Jewellery Export Promotion Council (GJEPC) and the textile sector, have urged the government to provide cash support, duty drawback schemes, and relief on loan repayments to prevent job losses. They also want faster progress on free trade agreements (FTAs) with Europe to offset the US market shock.
Exemptions
About $27.6 billion worth of exports remain duty free, mainly pharmaceuticals, electronics, petroleum products and certain metals. However, Trump has warned of possible higher tariffs on drugs and electronics in the future.
Outlook
The US is India’s largest export market, accounting for 20% of India’s merchandise exports and 2% of GDP. With the new tariffs, India faces the dual challenge of losing export competitiveness in the US while rivals like Vietnam, Bangladesh and China gain an advantage.
Unless exporters receive quick government support, the 50% tariffs could cause a long-term setback for India’s export-driven sectors, hitting both trade and jobs.
