A sweeping 25 per cent tariff by the United States on Indian exports has triggered panic among domestic industries, especially textiles, steel and agriculture. Facing potential order cancellations and job losses, exporters have urged the Indian government to launch an emergency export promotion mission and extend financial support.
Indian exporters are staring at a crisis after the United States announced a uniform 25 per cent tariff—plus additional penalties—on all goods imported from India, starting August 7, 2025. The abrupt move has rattled key sectors like textiles, engineering, steel and agriculture, prompting an urgent call for government intervention.
“Exporters spoke about the adverse effects of tariffs. They want support,” a government official told The Economic Times, following a high-level meeting between commerce minister Piyush Goyal and industry leaders.
The tariff, significantly higher than rates faced by rivals like Bangladesh, Vietnam and Pakistan, could jeopardise nearly half of India’s $87 billion export volume to the US—New Delhi’s top trade partner and a key market for price-sensitive sectors.
Sectoral Impact
- Textiles, which contribute one-third of India’s exports to the US, are particularly vulnerable. A spokesperson from the sector said, “The US market is price sensitive with lower design elements. The impact will be visible on core items like T-shirts and home textiles from September, during the peak season.”
- Industry representatives warned that the 25% rate leaves no room for cost sharing among exporters, importers, and end consumers—unlike a manageable 20%, which could have been absorbed with minor price adjustments.
- Without interest equalisation on export credit and enhanced RoSCTL benefits (Rebate of State and Central Taxes and Levies), exporters fear a cascading impact on margins, competitiveness, and employment.
- Steel manufacturers highlighted added pressure on logistics and raw material costs, with small and medium enterprises (MSMEs) bearing the brunt of this disruption.
Trade in Trouble
The timing couldn’t be worse. With Indian merchandise exports declining amid global headwinds, the new US duty is expected to cut deeply into margins and contracts already negotiated. Some exporters fear order cancellations or renegotiations in the weeks ahead.
Government Response
Minister Piyush Goyal acknowledged industry concerns during stakeholder interactions in Mumbai and hinted at a multi-pronged strategy, “Discussed bold ideas to enhance global competitiveness, sustainability, and value chain integration with the textiles sector. Together, we’re weaving India’s rise as a global textiles powerhouse,” he posted on X.
- A dedicated Export Promotion Mission
- Strategic assistance to retain US market access
- Fast-tracked credit and insurance support from EXIM Bank and ECGC
- Diplomatic lobbying to renegotiate or defer the tariff imposition
Background & Implications
The US move is being seen as part of a broader rebalancing of trade dependencies, especially under Donald Trump’s second-term tariff offensive, aimed at reshoring jobs and reducing deficits. But Indian exporters argue that such protectionist measures punish allies, not just competitors like China.
