Indian Exports Risk Losing Competitiveness in U.S. Market Amid Steep Tariff Hike

Indian exporters are bracing for a significant blow following the U.S. decision to raise tariffs on Indian goods from 25% to 50%, a move expected to severely undermine India’s competitiveness in the American market. The hike will particularly affect key export sectors such as apparel, footwear, handicrafts, jewellery, engineering goods, and electronics.

 

Until now, the U.S. had imposed a 25% tariff on certain Indian products, a rate already seen as challenging for exporters. However, with the latest increase to 50%, industry bodies fear that Indian products will be priced out of the American market. The Federation of Indian Export Organisations (FIEO) has warned that the new rates could drastically reduce India’s share in one of its most important export destinations.

 

The decision follows similar measures announced against other countries, excluding Brazil. Notably, the U.S. has not imposed a 50% tariff on any country except India, amplifying concerns among Indian businesses.

 

Trade analysts note that the American market is a crucial revenue source for Indian exporters, who shipped goods worth $88 billion to the U.S. in the last financial year 2024–25. Between April and June alone, India’s exports to the U.S. dropped by 22% compared to the same period last year, even before the new tariff came into force.

 

Industry leaders stress that the impact will be severe for labour-intensive sectors such as textiles, leather goods, jewellery, and engineering products, which employ millions in India. Former Chairman of the Confederation of Indian Textile Industry, Sanjay Jain, has called for urgent government intervention to safeguard exporters. He suggested that New Delhi should swiftly announce countermeasures to protect domestic industry and explore alternative markets to reduce dependence on the U.S.

 

The Global Trade Research Initiative (GTRI) has pointed out that even at the previous 25% tariff, Indian exporters were losing business worth $25 billion annually. The new 50% rate, they warn, could push many exporters out of the American market entirely, forcing them to seek trade opportunities in other regions.

 

The escalation is part of a broader trade dispute, with U.S. President Donald Trump also imposing a 30% tariff on Chinese goods. Experts believe this protectionist stance is aimed at reshaping global trade flows, but in doing so, it risks disrupting long-standing commercial ties with key partners like India.