Synopsis: With fresh US tariffs on Indian goods now effective, labour-intensive sectors like textiles, gems, jewellery, and shrimp exports face headwinds, while pharma, steel, and smartphones remain relatively shielded. Analysts warn of competitiveness loss to China, Vietnam, and other Asian peers.
The United States’ latest tariff regime against Indian goods came into effect on Wednesday (US time), bringing a mix of challenges and resilience across sectors. While labour-heavy industries such as textiles, gems & jewellery, and shrimp exports brace for disruptions, pharmaceuticals, smartphones, and steel are expected to remain largely insulated owing to exemptions and existing tariff structures.
Textiles: The US remains India’s biggest export market for textiles, a sector that has gained market share in recent years at China’s expense. But with tariffs now raised to 50%, exporters could see reduced competitiveness, especially versus China (30%), Vietnam (20%), and Indonesia (19%).
Gems & Jewellery: The sector, which sends one-third of its $28.5 billion annual shipments to the US, faces severe challenges with tariffs doubling from 25% to 50%. Industry players fear order cuts and margin squeezes.
Shrimp Exports: With more than half of India’s shrimp exports headed to the US, the industry fears order cancellations and steep losses, as rival Ecuador becomes more price-competitive.
Insulated Sectors
Pharmaceuticals: Exempted from the new tariff structure, pharma continues to enjoy strong demand. India contributes 6% to US pharma imports, while 40% of India’s pharma exports go to the US — safeguarding the industry’s revenue stream.
Steel & Smartphones: These sectors remain relatively unaffected due to existing tariff coverage, strong domestic demand, and limited exposure to the newly imposed duties.
Wider Impact
According to an SBI Research report, the tariffs could shave 40–50 bps off US GDP, while raising input cost inflation. The report warns that at worst, India’s $45 billion in affected exports could push its trade surplus with the US into deficit. However, it expects trade negotiations to ease disruptions in the medium term.
Meanwhile, US consumers may face higher costs for import-sensitive items like electronics, autos, and consumer durables, as inflationary pressures mount. Analysts estimate US inflation could remain above the 2% target through 2026, partly due to these tariffs.
Disclaimer: This article is for informational purposes only and should not be construed as financial, investment, or trade advice. Readers are encouraged to seek professional guidance before making business or investment decisions.
