Indian exporters are bracing for a major jolt following the imposition of a 25% tariff by the United States, effective August 7, 2025, as announced by former President Donald Trump. The move, which is perceived as a protectionist measure, threatens to undercut India’s competitive edge in its key export sectors.
Major Sectors at Risk
The newly enforced tariffs disproportionately affect some of India’s top-performing sectors, including textiles, gems and jewelry, shrimp, leather, chemicals, and electrical machinery. These industries collectively account for billions in export value and are deeply integrated with MSME operations and employment chains.
“The 25% US tariff is a heavy blow. It makes our products significantly more expensive in the US market compared to competitors like Vietnam and Thailand, who enjoy either lower or zero tariffs,” says an industry representative from the Council for Leather Exports.
Key Challenges Faced by Indian Exporters
| Challenge | Details |
|---|---|
| US Tariff Impact | 25% tariff imposed on Indian goods, effective August 7, 2025. |
| Sectors Affected | Textiles, gems & jewelry, shrimp, leather, chemicals, electrical machinery. |
| Projected Export Decline (FY 2026) | Estimated drop from $86.5 billion to $60.6 billion (a 30% decline). |
| Financial Burden | Exporters are struggling to maintain margins; many may be forced to sell below cost to retain buyers. |
| High Interest Rates | Domestic borrowing rates range 8%–12%, compared to 3%–4.5% in Vietnam, Thailand, China, and Malaysia. |
| Competitor Advantage | Countries like Vietnam and Thailand face lower tariffs or free trade agreements with the US. |
| Support Sought | Exporters urge government to extend financial aid, PLI-type incentives, and subsidized credit lines. |
| Employment Concerns | Factories may cut jobs or downsize operations if US orders drop significantly. |
| Call for Action | Industry bodies want immediate intervention from the government to negotiate trade terms and introduce a relief package for exporters. |
The Road Ahead
Industry stakeholders are calling for urgent and strategic intervention from the Indian government. Among the key recommendations are:
- Negotiation of Tariff Waivers: Through diplomatic and trade channels with the US.
- Expansion of Export Incentives: Modeled on the Production-Linked Incentive (PLI) scheme for affected sectors.
- Lowering Interest Rates for Exporters: To make Indian goods cost-competitive internationally.
- Exploring New Markets: Diversifying export destinations to reduce dependence on the US.
With the global trade environment becoming increasingly volatile, Indian exporters need both policy support and structural reforms to weather the storm. Swift action in the next few months could be the difference between survival and shutdown for many export-dependent businesses.
Conclusion
The imposition of tariffs comes at a precarious time when global trade is already strained by inflationary pressures and geopolitical disruptions. Without meaningful relief, India’s export competitiveness risks severe long-term damage. Government support and strategic recalibration will be critical in navigating this new chapter in global trade dynamics.
Glottis Limited 
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