President Donald Trump’s decision to double tariffs on Indian exports could trim down India’s GDP growth by 0.5–0.6% in the current fiscal year. US tariffs
India’s Chief Economic Adviser, V. Anantha Nageswaran said in an interview with Bloomberg that the economic fallout would depend on how long the tariffs remain in place. US tariffs
The U.S. president spiked tariffs on Indian goods from 25% to 50%, penalizing last month for indirectly supporting Russia’s war in Ukraine through continued purchases of discounted oil. US tariffs
The move followed India’s inability to strike a trade deal with Washington and its refusal to open agricultural sector to U.S. products. US tariffs
Indian Finance Minister Nirmala Sitharaman has defended India’s energy strategy, reiterating that the country will continue importing Russian crude as long as it remains economically viable. US tariffs
According to the U.S. Census Bureau, bilateral trade in goods between the two countries reached $129 billion in 2024, with the U.S. running a trade deficit of $45.8 billion with India. US tariffs
Industry experts estimate that the new tariffs could affect nearly 55% of India’s $87 billion in merchandise exports to the U.S., impacting major sectors such as textiles, footwear, gems and jewelry, seafood, and leather. These are key industries not only in terms of export earnings but also for their employment footprint across the country. US tariffs
Some experts fear that New Delhi could face an estimated economic fallout at around $47 billion.
US says India must choose sides as Russian oil trade, strategic moves mar ties
In India’s industrial hubs like Tirupur (Tamil Nadu), Noida (Uttar Pradesh), and Gujarat, production lines are already shutting down. The Federation of Indian Export Organizations (FIEO) confirmed that many factories have started cutting output due to collapsing margins.
For instance, effective duties on ready-made garments have soared from 12% to 62%, while shrimp exports now face a 60% tariff. With already-thin profit margins, many businesses—especially small and medium enterprises—risk closure.
The consequences extend far beyond boardrooms. In Tirupur, home to around half a million garment workers, fear and uncertainty are rising.
“We’re scared of losing our jobs. Many of us took loans to come here,” said Harihar Pradhan, a 32-year-old migrant worker from Odisha, in an interview with The Times of India. “If factories start laying off workers, we’ll be left with nothing.”
The jewelry sector, heavily reliant on U.S. demand, is bracing for a dramatic decline. Kirit Bhansali, chair of the Gem and Jewelry Export Promotion Council, warned of “devastation,” noting that the U.S. accounts for nearly 30%—or $10 billion—of India’s global jewelry exports. “We fear a 75% drop in shipments to the U.S., especially in polished diamonds, colored gemstones, and crafted jewelry.”
Also vulnerable are leather and seafood exporters. Two-thirds of India’s $6 billion shrimp exports go to the U.S., while the leather sector sends one-fifth of its goods to American buyers. Higher tariffs threaten to shift demand to competitors like Ecuador (which faces only a 15% duty on shrimp) and Vietnam.
While the government maintains its GDP growth forecast of 6.3–6.8% for FY2025–26—buoyed by a strong 7.8% growth in the April–June quarter—many analysts believe the momentum may be difficult to sustain under prolonged trade pressure.
The trade standoff has had political implications for Prime Minister Narendra Modi, who has championed manufacturing and exports as engines of job creation and economic growth. The tariffs, however, risk undermining this strategy by displacing thousands of skilled and semi-skilled workers in cities like Surat, Mumbai, and Jaipur, as well as in rural production clusters.
The ripple effects reach far into the informal economy, impacting delivery workers, logistics providers, street vendors, and small service businesses connected to export hubs.
Meanwhile, Indian exporters rushed shipments in August to beat the tariff deadline, but the industry fears that even a short-term disruption of three to six months could lead to permanent loss of market share.
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Muhammad Luqman is Associate Editor at Views News Now. He writes on wide-ranging issues including economy, South Asia, the Middle East, agriculture, economy and innovation. Luqman has worked some of the leading news organizations and won acclaim for his original and research-based works.
