Admin Editor | Apr 23 2025
7 April,2025
While some sectors may benefit from the trade shifts, overall competitiveness is challenged as India navigates increasing duties under US policy.
The US has been India’s largest export destination for several years, but with the new tariffs, Indian policymakers face tough choices. (AP Photo/Mark Lennihan)
New Delhi: India’s merchandise exports to the US in 2025 may decline by $5.76 billion, or 6.41%, following the imposition of higher tariffs by the Trump administration, the Global Trade Research Initiative (GTRI) said in a report, with gems and jewellery, marine products, electronics, and auto parts bearing the brunt.
The GTRI analysis, based on 2024 trade data, maps the exposure of Indian goods under the revised US tariff regime, while also factoring in the competitiveness of other exporters such as China, Mexico and Canada. Of $89.81 billion worth of goods shipped from India to the US last year, almost 75%—valued at $67.2 billion—will now be subject to a 26% duty, replacing the much lower most-favoured nation (MFN) tariffs.
The US has been India’s largest export destination for several years, but with tariffs being used as a negotiating tool under US President Donald Trump’s ‘America First’ policy, Indian policymakers face tough choices. While some have called for retaliatory tariffs, the government has so far indicated it will continue to engage through bilateral trade negotiations, as first reported by Mint on 4 April.
he new duties are part of a broader strategy to align tariffs with reciprocal market access, and while energy products such as petroleum and solar panels, along with pharmaceuticals, remain exempt, the steep hike across a broad swathe of industrial and consumer goods has made Indian products significantly less competitive.
“The average impact might look modest, but the effect is deeply uneven,” said Ajay Srivastava, co-founder of GTRI. “We’re likely to see sharp declines in some sectors while others may benefit from trade diversion, especially where Chinese goods have been penalised even more heavily.”
‘Profound shifts’
The report shows that exports of fish and crustaceans may fall by over 20%, iron and steel items by 18%, and precious stones and jewellery by 15%. Auto parts and electronics are projected to shrink by over 12% each, owing to their high dependence on imported inputs and rising tariff costs in the US.
Gold jewellery and polished diamond exports—worth $11.9 billion last year—are expected to drop by $1.82 billion due to the new 30.2% tariff, significantly reducing the attractiveness of Indian gems in the US market.
"The world is going through profound economic shifts, and the diamond industry is feeling the impact just as much as any other. From changes in global trade dynamics to evolving consumer preferences and tightening financing norms, every link in the value chain is being tested,” said Vipul Shah, former chairman of the Gem and Jewellery Export Promotion Council. “The industry will need to adapt quickly, innovate and find new growth models to stay resilient in this changing environment."
Electronics and smartphone exports, which had surged to $14.4 billion, are likely to fall by $1.78 billion as the new tariffs of almost 27% eat into already thin margins. India's global value chain dependency in these sectors further weakens its ability to compete with Mexico and Vietnam, which have preferential or duty-free access.
India’s seafood exports to the US are among the worst hit, with frozen fish and shrimp—worth $2 billion in 2024—now facing a 26% tariff after entering duty-free for years. These products account for about a third of India’s global seafood exports. The report projects a 20.2% decline, or $404.3 million loss, especially as Canadian seafood continues to enjoy duty-free access under the USMCA trade pact. Processed meat and fish exports are also affected, with India expected to lose $83.1 million, or 14.2%, as tariffs rise from 2.6% to 31.2%.
Spice exports—especially coffee, tea and related items—valued at $460.8 million, are projected to fall by 13.5%, or $62.2 million. These items earlier faced a nominal 0.2% MFN duty, but now attract a 26.4% tariff, making Indian exports less viable amid competition from Brazil and Colombia.
Textiles, garments
The report highlights a steep 47.4% tariff on cereals—mainly rice—replacing the earlier 10.7% MFN rate. India exported $427.4 million worth of cereals to the US last year, and this is projected to fall by 12.3%, or $52.6 million. Although Thailand faces higher tariffs, Canada's better trade terms may further disadvantage India in this space.
Even traditional strongholds such as textiles and garments have not been spared from higher duties, but India may still gain market share as rivals face steeper tariffs. While the tariff on knitted garments has shot up to 53.8%, India’s exports in this segment are expected to grow by 3.2% due to favourable pricing and sourcing shifting away from China. Home textiles and made-ups (products including home textiles used in internal space furnishing) could increase 4.2%, helped by India’s position as the second-largest supplier to the US after China.
Pharmaceuticals are among the few sectors where India has escaped the tariff hike, although Trump has said that tariffs on pharma imports will come soon. With zero-duty MFN access continuing, exports in this segment—worth $12.7 billion in 2024—are projected to grow by 2.1%.
However, the report notes that much of this growth hinges on continued low-cost availability of active pharmaceutical ingredients from China and warns that the sector remains vulnerable to any future policy rethink in Washington. In small industry segments, the picture is mixed. While paper, glass, and ceramic exports face fresh barriers, kitchenware, and footwear may gain modestly as Indian goods remain price competitive.
India’s exports of tools and cutlery could rise by 2.1% despite a 34% tariff, thanks to China’s diminished competitiveness. Footwear exports are expected to grow by 3.1%, albeit from a small base.
GTRI said the estimated impact assumes that all other factors—exchange rates, demand trends, and non-tariff barriers—remain unchanged.
“Many exporters may adapt over time, and some sectors may shift production or revise pricing,” it noted. “But in the short term, the disruption is likely to be real.”
India’s merchandise exports to the US have been on an upward trajectory over recent years. Exports were valued at $75.6 billion in FY22, and this increased to $78.3 billion in FY23, demonstrating a strengthening trade relationship. Although exports dipped to $77.5 billion in FY24 —primarily due to supply chain disruptions—the long-term trend remains positive.