The USA’ choice to impose a 26 % tariff on Indian imports has introduced important adjustments to commerce relations between the 2 nations. This transfer is anticipated to have a significant affect on a number of key industries in India that depend on enterprise from exports. Whereas the tariff goals to handle commerce imbalances, it raises considerations for sectors comparable to electronics, textiles, and agriculture.
Right here’s a better have a look at the industries most affected and the way India is responding to those challenges
Sectors Most Affected:
1. Electronics and Gems & Jewelry
The electronics sector, which exported USD 13 billion value of merchandise to the US in 2024, will face severe challenges. The earlier tariff was simply 0.41 %, however the sharp improve to 26 % makes Indian items much less aggressive. Equally, the gems and jewelry business, with USD 9 billion in exports, will battle as tariffs rise from 2.12 % to 26 %, affecting its market place.
2. Textiles and Attire
The textile sector, which despatched USD 9.6 billion value of products to the US in FY24, is one other main sufferer. The US is one among India’s largest patrons, accounting for 28 % of those exports. Merchandise like carpets, which make up 58 % of India’s textile shipments to the US, might lose floor to opponents like Bangladesh and Vietnam.
3. Vehicles and Auto Parts
Whereas the brand new 26 % tariff doesn’t apply to cars, the sector is already going through current 25 % duties. Firms like Tata Motors’ Jaguar Land Rover (JLR) noticed a 5 % inventory decline after the announcement, whereas auto components producer Sona Comstar dropped 4 %, reflecting market considerations over commerce boundaries.
4. Agriculture and Processed Meals
Indian exports of seafood and meat, valued at USD 2.58 billion, will now face a 27.83 % tariff. Merchandise like liquor, sugar, and processed meat have been hit with extra duties, making it more durable for Indian exporters, significantly small and medium-sized companies, to compete within the US market.
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Sectors with Non permanent Reduction:
1. Prescribed drugs
India exports USD 12.2 billion value of prescription drugs to the US, and for now, the sector is exempt from the brand new tariffs. Nevertheless, the Trump administration has hinted at attainable future tariffs on this business, which might pose dangers to India’s position as a significant provider of generic medicines.
2. Power and Minerals
Sure vitality exports, comparable to crude oil and coal, have been ignored of the brand new tariffs, offering some reduction for India’s USD 9 billion vitality exports. Nevertheless, future coverage adjustments might nonetheless have an effect on the sector.
India’s Main Exports to the US in CY24 (USD mn):
| Export Merchandise | Export Worth (USD mn) | % Share in Complete Exports to the US |
| Electrical Equipment | 12,580 | 15.6 |
| Gems and Jewelry | 9,299 | 11.5 |
| Pharmaceutical Merchandise | 8,875 | 11.0 |
| Nuclear Reactors, Boilers, and Equipment | 6,572 | 8.1 |
| Refined Petroleum Merchandise | 4,465 | 5.5 |
| Articles of Iron and Metal | 2,955 | 3.7 |
| Textile Articles | 2,948 | 3.7 |
| Auto & Auto Ancillaries | 2,660 | 3.3 |
| Non-Knitted Attire Articles | 2,591 | 3.2 |
| Natural Chemical substances | 2,588 | 3.2 |
| Knitted Attire | 2,586 | 3.2 |
| Marine Merchandise | 1,969 | 2.4 |
| Plastic Articles | 1,631 | 2.0 |
| Miscellaneous Chemical Merchandise | 1,243 | 1.5 |
| Carpets and Different Textile Flooring Coverings | 1,196 | 1.5 |
| Furnishings | 1,150 | 1.4 |
| Others | 15,465 | 19.1 |
| Complete Exports to the US | 80,774 | 100.0 |
Supply: Minister of Commerce and Business
Wider Financial and Market Affect
The manufacturing sector is anticipated to expertise a slowdown, with specialists forecasting a 50-basis-point discount in GDP progress resulting from diminished export competitiveness. In the meantime, the Indian rupee weakened to 85.69 per US greenback as buyers shifted to safer property like gold and Japanese bonds, resulting in sell-offs within the metals and oil sectors.
Though IT exports stay unaffected by the brand new tariffs, considerations over decreased US shopper spending might affect demand for Indian IT providers, prompting analysts to downgrade the sector’s outlook.
Conclusion
The US tariff hike is a significant problem for Indian exporters, significantly in sectors like electronics, textiles, and agriculture. Whereas exemptions for prescription drugs and vitality present momentary reduction, future uncertainties stay. India’s capability to adapt by way of commerce negotiations and market diversification will likely be essential in figuring out the way it weathers these financial shifts. As world commerce insurance policies proceed to evolve, India’s response will form its place within the worldwide market.
Written by – Siddesh S Raskar
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