Over 70% Indian exports exposed due to…, will heavily impact THESE high-value sectors because…

The ICRIER report suggested a three-pronged response to Trump tariffs, including ‘smart’ trade negotiations, relief for heavily impacted sectors, and diversification of India’s export markets.

Trump Tariffs: About 70 percent of Indian exports to the United States, equivalent to USD 60.85 billion, stand exposed due to the 50 percent import duty imposed by US President Donald Trump, a new report has revealed.

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Which sectors will be hit hardest?

As per an analysis by the Indian Council for Research on International Economic Relations (ICRIER), Trump tariffs will heavily impact high-value sectors such as textiles and apparel, gems and jewellery, auto parts and agricultural products, particularly shrimp exports. “These sectors not only anchor the merchandise exports to the US but also directly affect employment generation and the livelihoods of millions of workers and farmers,” the ICRIER report said.

The report noted that India’s textiles and apparel sector could lose its competitive edge in a key export market as it faces a tariff disadvantage of over 30 percentage points compared to competitors like Bangladesh, Pakistan and Vietnam.

Similarly, the gems and jewellery exports face challenges from suppliers in countries like Turkey, Vietnam, and Thailand, while auto parts, which constitute 3 percent of India’s exports to the US, are also vulnerable.

According to the report, shrimp exports will be the worst in the agricultural sector as Trump tariffs imposed on India are higher than those slapped on competitors like Ecuador, Indonesia, and Vietnam. “These are sectors where buyers can switch sourcing relatively quickly, which gives US importers bargaining power and weakens India’s negotiating position,” the report stated.

What response ICRIER suggests?

In its report, the ICRIER suggested a three-pronged response to Trump tariffs, including ‘smart’ trade negotiations, relief for heavily impacted sectors, and diversification of India’s export markets. “Firstly, smart negotiations with logic and rationality. Secondly, announce immediate and targeted relief support to hard hit sectors, and last on high priority, diversify our export markets.”

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“The success of our leaders will be ensuring that short-term disruptions give way to long-term gains, reinforcing India’s position as a trusted and indispensable player in the global economy,” the ICRIER report concluded.

Trump tariffs on India

On August 6, Donald Trump signed an executive order imposing an additional 25 percent tariffs on Indian goods, raising the total levy to 50%. The US President called the additional tariffs on India as a “punishment” for purchasing Russian oil and weapons, as he accused New Delhi of “funding” Moscow’s war on Ukraine.

“I find that the Government of India is currently directly or indirectly importing Russian Federation oil. Accordingly, and as consistent with applicable law, articles of India imported into the customs territory of the United States shall be subject to an additional ad valorem rate of duty of 25 percent,” the order read.

The additional 25 percent tariffs will come into effect from August 27.

(With inputs from agencies)