An worker checks the inventory of medicines at a pharmacy retailer in Hyderabad on July 31, 2025.
Noah Seelam | Afp | Getty Photos
India’s exports to the U.S. face a steep 50% tariff after U.S. President Donald Trump on Wednesday slapped a further 25% obligation on Indian items over the nation’s oil purchases from Russia.
The additional duties — set to return into impact inside 21 days — will likely be stacked on prime of the 25% tariffs on New Delhi due Thursday stateside, based on the manager order.
Analysts are warning that the upper U.S. tariffs threat considerably diminishing the attract of Indian exports to the U.S., in comparison with regional friends.
“India’s attractiveness as an rising manufacturing hub will likely be massively undermined,” Shilan Shah, deputy chief rising markets economist at Capital Economics, mentioned in a observe. He estimates that the U.S. spending drives round 2% of India’s GDP and the additional 25% tariff is “massive sufficient to have a fabric influence.”
India counts the U.S. as its single largest export companion. Its complete items’ exports reached about $434 billion within the 12 months ended March 2025, and almost 20%, or $86.51 billion price of products have been shipped to the U.S., based on the newest official knowledge.
The ensuing drop in exports as a result of tariffs would imply the financial system grows by nearer to six% this 12 months and subsequent, reasonably than the 7% progress forecast previous to Trump’s announcement, Shah mentioned.
The potential 50% additional tariff on Indian merchandise may put a drag of a complete 0.6 share level on its GDP, based on Goldman Sachs’ estimates.
India’s main exports to the U.S. are engineering and digital items, medication and prescription drugs, gems and jewellery, based on the federal government knowledge.
With notable variance throughout industries and little readability over Trump’s plans with sector-specific tariffs, listed below are segments that doubtlessly stand to lose essentially the most:
Engineering items
Engineering items, together with merchandise like auto components, energy gear and industrial equipment, have been India’s largest of exports to the U.S. and globally, hitting almost $117 billion within the 12 months ended March.
Round 19.16 billion price of those industrial items, or about 16%, have been offered to the U.S. over that interval.
Exports of iron, metal, and different merchandise exports accounted for 17.07% of the whole engineering exports, whereas non-ferrous metals and merchandise exports contributed 10.52%. Metal exports already face 50% sectoral tariffs, worsening the outlook for the sector as the identical levy now looms massive on its different segments.
India’s complete items exports jumped 1.92% in June, partially pushed by the rise in engineering items, which rose 1.35% to $9.5 billion.
Gems, jewellery, textiles and apparels
The gems and jewellery, and textiles and apparels sectors, are additionally anticipated to be considerably jolted by the sudden hike in U.S. tariffs.
The gems and jewellery sector contributes 7% of India’s GDP and employs about 5 million employees, based on a July report by a state-backed trade physique.
About 33% of India’s gems and jewellery exports went to the U.S. in fiscal 12 months 2025.
Rajesh Mehta, government chairman of Indian jewellery maker Rajesh Exports, mentioned in an interview with CNBC Wednesday that increased tariffs will likely be an “extra burden,” whereas calling for presidency help for the sector.
Textiles is among the many most labor-intensive sectors in India, straight using about 45 million employees throughout the nation. Just like gems and jewellery, round 34% of textile exports went to the U.S. within the final fiscal 12 months.
“Definitely, the brand new tariff fee goes to significantly check the resolve and resilience of India’s textile and attire exporters as we won’t take pleasure in a major obligation differential benefit vis-à-vis many different nations, besides Bangladesh, with whom we compete for a bigger share of the US market,” the Confederation of Indian textile trade mentioned in a assertion dated July 30, earlier than the newest hike in duties was introduced.
Electronics
India’s electronics sector relied on the U.S. for 38% of its exports final fiscal 12 months, making it “essentially the most uncovered” to potential dangers of the tariff exemptions being rolled again, based on Alexandra Hermann, lead economist at Oxford Economics.
India overtook China to change into the highest exporter of smartphones offered within the U.S. within the second quarter, after Apple accelerated to maneuver its meeting of extra iPhones to the South Asian nation.
In a significant, though short-term, reprieve for corporations resembling Apple, Trump in April introduced to exempt smartphones, computer systems and different digital items from tariffs.
India’s U.S.-bound exports of digital items have accelerated this 12 months, and its exports in March alone greater than doubled to $2.76 billion from a 12 months earlier.
Prescription drugs
Whereas the pharmaceutical sector can be at the moment exempt from tariffs, Trump has threatened duties on pharma exports to the U.S. In an interview to CNBC Trump mentioned he would initially impose a “small tariff” on pharma, after which increase that fee to as excessive as 250% in a couple of years.
India’s pharma sector has a excessive dependency on U.S. consumers, with its medication and pharma exports to the U.S. reaching over $10.5 billion for the 12 months ended March 2025, accounting for almost 35% of the class’s complete shipments, based on the official knowledge.
“[India’s] Chemical compounds general have considerably much less US publicity however this masks the excessive pharmaceutical sector’s US dependency therein,” mentioned Hermann, leaving the pharma sector extremely weak to Trump’s potential tariffs.
India additionally exported metal and aluminum to the USA, however commerce in these items is taxed by means of a separate government order.
General competitiveness
“The U.S. may extra simply supply for provides from various import places, however it’s a lot tougher for India to diversify away from the U.S. throughout totally different sectors,” mentioned Michael Wan, senior economist at MUFG Financial institution.
India competes towards the likes of Europe in prescription drugs; Vietnam and Mexico in electronics; Cambodia, Sri Lanka, Bangladesh and Vietnam in textiles; and Israel in gems and jewellery, based on Wan. “If these tariff differentials stick, India’s export competitiveness will seemingly be eroded over time,” he mentioned.
Among the many export-reliant nations which have clinched preliminary offers with Trump, Vietnam noticed its tariffs lowered to twenty% from 46%. In his newest tariff adjustment, Trump additionally eased tariffs on Thailand to 19% from the “reciprocal” tariff stage of 36%, Bangladesh to twenty% from 35% and Cambodia to 19% from 36%.
Round 32% of India’s exports to the U.S. are at the moment exempt from tariffs, based on MUFG’s estimates, together with electronics and pharmaceutical merchandise.
