New Delhi,aug 4
Indian exports to the US are projected to decline by nearly 30 per cent, from USD 86.5 billion in 2024-25 to about USD 60.6 billion in 2025-26, as the new 25 per cent reciprocal tariffs come into effect, according to Global Trade Research Initiative (GTRI).According to a GTRI report on Monday, labour-intensive sectors such as garments, textiles, shrimp, jewellery, and engineering goods are among the worst affected.The tariffs put India at a serious disadvantage compared to regional rivals like Vietnam, Bangladesh, and Mexico, who face lower or zero duties, it noted.To cushion the blow and future-proof its trade strategy, the GTRI has recommended a targeted five-point action plan that includes financial relief for MSMEs, real-time trade intelligence, smarter use of FTAs, tourism reform, and streamlined onboarding for new exporters.India faces a 25 per cent country-specific tariff and an extra unspecified ‘penalty’ on its exports to the US–one of the highest among Asian exporters, second only to China at 30 per cent. In contrast, competitors such as Vietnam (20 per cent), Bangladesh (18 per cent), Indonesia, Malaysia, and the Philippines (19 per cent), and Japan and South Korea (15 per cent) enjoy lower rates.This puts Indian exports at a clear disadvantage across most sectors, barring a few exemptions, GTRI reiterated.The new US tariff regime excludes pharmaceuticals, energy products, critical minerals, and semiconductors.”But outside these, Indian goods are under pressure,” it said.Knitted and woven garments now face steep US tariffs of 38.9 per cent and 35.3 per cent, much higher than the rates for Vietnam, Bangladesh, and Cambodia.Made-up textiles like towels and bedsheets, which earn India USD 3 billion in exports (with nearly half going to the US), now face a 34 per cent duty. “This gives a clear advantage to competitors like Pakistan and Vietnam,” GTRI asserted.India’s USD 2 billion shrimp exports, which make up 32 per cent of global supply, will now face a 25 per cent US tariff.”This wipes out their price edge over rivals like Canada and Chile, who benefit from free trade deals with the US,” GTRI said.Mechanical gold jewellery exports to the US are likely to be hit the hardest.
India’s USD 4.7 billion in metal exports–mainly steel, aluminium, and copper, according to GTRI, will also suffer. GTRI argued that the higher cost is expected to curb demand from US infrastructure and energy buyers.Trump’s 27.1 per cent tariff on India’s USD 10 billion diamond and jewellery exports–40 per cent of its global trade in the sector–delivers a heavy blow to the sector for India, according to GTRI.”With value addition barely 3-4 per cent, margins are wafer-thin, and such duties can turn exports instantly unviable. Mechanical gold jewellery, worth USD 3.6 billion, is set to be hit hardest,” the report read.In diamonds, the impact is even more complex.India exports USD 4.9 billion worth of cut and polished diamonds to the US, but US imports show only USD 2.5 billion. Buyers select a fraction and return the rest.”A high upfront tariff disrupts this model, raising costs on even unsold stones, and could sharply reduce demand,” GTRI said.Petroleum exports are still tariff-free, but India’s use of Russian crude “could invite penalties”, GTRI said, referring to President Trump’s unhappiness around Indian crude oil imports from Russia.Faced with these challenges, can India diversify its trade to other countries? According to GTRI, exporting more to other countries to make up for losses in the US market won’t be easy.” Global trade is shifting away from openness toward tighter controls, driven by politics, security, and climate rules.
For example, the EU–which imported USD 75.7 billion worth of Indian goods–will begin applying a carbon tax in January, making Indian steel and aluminium less competitive,” GTRI supplemented.Last Wednesday, President Donald Trump announced the imposition of 25 per cent tariffs on Indian goods plus an unspecified penalty, even as there were hopes of an interim India-US trade deal that would have otherwise helped avoid elevated tariffs.India and the US initiated talks for a just, balanced, and mutually beneficial Bilateral Trade Agreement (BTA) in March this year, aiming to complete the first stage of the Agreement by October-November 2025.
