Indian fast-moving consumer goods (FMCG) majors, including Amul, ITC, Parle, and Godrej Consumer Products, are recalibrating their global strategies in response to rising US tariffs. These tariff hikes—especially on dairy and certain processed foods—are pushing companies to explore alternative manufacturing hubs to remain competitive in international markets.

Tariff Pressures Trigger Strategic Shifts

The US imposes 60–70% import tariffs on dairy products, which have been further compounded by an additional 50% duty introduced under the Trump administration. This creates a heavy cost burden for Indian exporters, making direct exports increasingly unviable for certain categories.

Diversifying Manufacturing Locations

To counter these challenges, FMCG players are exploring production in third countries or even within the US itself.

• Amul already operates a milk production unit in the US and now plans to expand to paneer, butter, and cheese to avoid high import costs.
• ITC is considering Dubai as a base for exporting biscuits and frozen foods, leveraging the emirate’s favorable trade terms with the US.
• Blue Star, a leading air-conditioner manufacturer, is exploring Mexico for US-focused production, given its proximity and trade benefits.

Exports Still a Growing Opportunity

While exports to the US form only a small fraction of total revenues for most Indian FMCG firms, the market potential remains significant. The challenge now lies in balancing tariff compliance with cost efficiency, without losing market presence.

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Key Data Table: Indian FMCG Manufacturing Shifts for US Market

Company / Sector	Current US Presence	New / Planned Manufacturing Location(s)	Key Products Targeted for US Market	Tariff Challenge (%)
Amul (Dairy)	Milk production in the US	Expansion within US	Paneer, Butter, Cheese	Dairy: 60–70% + 50% additional
ITC (FMCG – Food)	Exporting from India	Dubai	Biscuits, Frozen Foods	Processed foods: High duties
Parle (Biscuits & Confectionery)	Exports from India	Exploring third-country production	Biscuits, Confectionery	Tariff-sensitive pricing
Godrej Consumer Products (FMCG)	Exports from India	Not disclosed	Personal care, Home care	General FMCG tariffs
Blue Star (Electronics)	Exports from India	Mexico	Air Conditioners	Electronics import duties