The United States’ extra 25 per cent tariff on goods from India – a ‘penalty’ for buying Russian weapons and crude oil that kicked in this morning, doubling existing levies – will deliver a severe shock to Indian exporters, the Federation of Indian Export Organisations warned Wednesday.
India exported $86.5 billion in goods and services to the US in FY25 – the most to any country – and two-thirds of that will be affected by Donald Trump’s outrageous tariffs, the FIEO told NDTV Profit.
Specifically, $48 billion in exports will now face 35 per cent pricing disadvantage, and this will be exploited by rivals from Vietnam, Bangladesh, and China, each of whom pays lower tariffs.
FIEO President SC Ralhan cited the textile and shrimp industries to make his point. He said production had already halted in textile hubs like Tirupur in Tamil Nadu, and that shrimp exporters, who rely on American market for 40 per cent of sales, face significant losses.
Other industries, including leather, ceramics, and handicrafts are also vulnerable, he said.
Mr Ralhan has called on the government to provide a measure of relief, including a 12-month halt to loan repayments and enhanced financial support for exporters. More significantly, he also urged the government to fast-track trade deals with other countries to expand markets.
Meanwhile, the Global Trade Research Initiative, or GTRI, has also warned of hits to Indian exports; a recent report said the value could plunge by 43 per cent in FY26 to less than $50 billion. And this could shave nearly one per cent of India’s GDP, a GTRI report said.
That figure is much higher than the estimate government sources gave NDTV on August 1, when the first tranche of 25 per cent tariffs came into effect. Then sources said GDP loss is not likely to exceed 0.2 per cent, but that figure will have been ramped up after the second tariff block.
READ | Trump’s Tariff To Have ‘Negligible Impact… 0.2% GDP Hit’: Sources
The GTRI report said up to 30 per cent of India’s exports will remain duty-free. The other 66 per cent – which includes the textile, gems, shrimp, and furniture industries – that will be affected.
The US is India’s largest export destination for textiles, a sector in which India has gained market share over the past five years, even as China’s has declined. Similarly, the US is the biggest market for India’s jewellers, accounting for nearly a third of $28.5 billion annual shipments.
What could offset this, though, is the resilience of the Indian economy, particularly an export sector that could, despite Trump’s tariffs, end FY26 with a marginal 2.3 per cent increase.
READ | Why Trump’s 50% Tariffs May Not Hurt India’s Growth, S&P Explains
Simultaneously, a report by the State Bank of India suggested tariffs on India could end up weighing on the US economy itself, pushing up inflationary pressures and impacting growth.
READ | SBI Report Estimates The Impact Of Trump Tariffs On US Economy
The report said that US GDP could be affected by 40-50 basis points due to the new tariffs, while the economy is also likely to face higher input cost inflation.
India has said it will stand firm against American pressure, even with the future of a trade agreement – a deal delayed over US demands for access to price sensitive dairy and agriculture sectors – at stake.
READ | “Agriculture Issues Most Sensitive”: US Ex Envoy On Interim Trade Deal
Prime Minister Narendra Modi has said he will “never compromise” the interests of Indian farmers, who form a critical vote bank.
India-US trade relations have expanded in recent years but it remains vulnerable to disputes over market access. The two launched trade agreement talks in February, after Mr Modi’s visit to the White House. The deal seeks to increase annual trade to $500 billion by 2030.