The impact of tariffs on India's exports to the US is a pressing issue, and the data is painting a concerning picture. India's trade margins are under threat, and the structural vulnerabilities of key export industries are being exposed.
Despite ongoing talks for a trade deal and the friendly displays between President Trump and PM Modi, the reality of the situation is stark. India's exports to the US have taken a significant hit, with a 37.5% decline over four consecutive months. This is according to an analysis by the Global Trade Research Initiative (GTRI), an Indian trade think tank.
The tariffs, which started at 10% at the beginning of the fiscal year, reached a peak in August with a 25% increase, followed by an additional 25% as a penalty for India's purchase of Russian oil during the Ukraine war. The GTRI analysis focused on the period from May to September to assess the immediate impact of these tariffs.
In absolute terms, the drop in exports from May to September 2025 was significant, with a plunge from $8.8 billion to $5.5 billion. This is one of the sharpest short-term declines in recent years, as reported by ANI.
Labour-intensive sectors, which make up nearly 60% of India's US exports, have been particularly affected. These sectors, including textiles, gems and jewellery, chemicals, agriculture, and machinery, experienced a 33% decline, dropping from $4.8 billion in May to $3.2 billion in September. Interestingly, tariff-free products, which account for about a third of India's total shipments, saw the steepest contraction, falling by 47% from May to September. Smartphones and pharmaceuticals were hit the hardest, with smartphone exports crashing by 58% in the same period.
But here's where it gets controversial: the reasons for the decline in smartphone exports are not clear and require further examination. Pharmaceutical product exports also slipped, and industrial metals and auto parts, subject to uniform tariffs, saw a milder decline of 16.7%.
The analysis also highlights the impact on specific industries: aluminium, copper, auto parts, iron and steel, gems and jewellery, and solar panels all experienced significant drops in exports. For example, gems and jewellery exports collapsed by nearly 60%, with Thailand and Vietnam capturing the lost US orders. This has deeply affected units in Surat and Mumbai.
And this is the part most people miss: with China facing lower tariffs (30%) and Vietnam even lower (20%) during the analysis period, India's competitiveness has taken a big hit, according to GTRI. The think tank urges the government to take swift action, suggesting emergency credit lines for MSME exporters as a priority measure.
Without intervention, India risks losing market share to Vietnam, Mexico, and China, even in sectors where it previously held a strong position. The data speaks for itself: tariffs have not only impacted trade margins but have also revealed the vulnerabilities of India's key export industries.
India claims it is in the final stages of discussions for a trade deal, with the US stating that India has agreed to reduce its purchases of Russian oil. However, Delhi has neither confirmed nor denied this assertion.
What do you think? Should India prioritize addressing these structural vulnerabilities, or is there another strategy that could mitigate the impact of tariffs? We'd love to hear your thoughts in the comments below!
