India’s exports to the US crashed 28.5% over five months due to US tariffs escalating from 10% to 50% in 2025, severely impacting labour-intensive sectors, smartphones, and gems. However, India’s smart pivot toward Asia, the EU, and the Middle East helped soften the blow, with sectors like shrimps surging 60% to China and gems exports jumping 79% to the UAE. The government also rolled out a ₹45,060 crore support package for exporters to aid diversification and sustain growth.
Tariff Impact and Timeline
• US tariffs on Indian exports increased from 10% in April to 25% on August 7, and then to 50% on August 27, 2025.
• India’s exports to the US fell from $8.83 billion in May to $6.31 billion by October 2025.
• Labour-intensive sectors saw a 31.2% drop, losing $1.5 billion in exports.
• Smartphones exports to the US crashed 36%, losing $790 million.
• Gems exports to the US collapsed 76%.
• India faces steeper tariffs than competitors like China (30%) and Japan (15%).
Shrimp and Marine Sector Success
• Marine exports grew 25% in September and 11% in October 2025 despite US tariffs.
• China increased orders by 60%, Japan by 37%, and Thailand by 70%.
• The EU approved 102 new Indian seafood processing units, totaling 502 units now cleared, enabling a 20-25% export boost potential to the EU.
• Shrimps accounted for $4.88 billion and 65% of India’s seafood exports in FY25.
Gems and Jewellery Market Diversification
• US-bound gem exports dropped 76% in September Year-on-Year.
• Overall gem exports declined only 1.5% due to rapid market shift.
• UAE imports surged 79%, Hong Kong 11%, and Belgium 8%, helping absorb volume losses.
• Quick diversification prevented structural damage to the $38 billion gems and jewellery industry.
Auto Components and Other Sectors
• US shipments of auto components declined 12%, but total auto exports rose 8% in September 2025.
• Germany, UAE, and Thailand became major alternative markets.
• The government warns exporters against price cuts in new markets to maintain competitive positioning.
• Tariff-exempt sectors like pharmaceuticals and petroleum still saw 25.8% decline, losing $881 million.
• Chemical exports tumbled 38%, from $537 million to $333 million.
Government Support and Strategy
• The government announced a ₹45,060 crore assistance package, including ₹20,000 crore in credit guarantees.
• Budget schemes were activated to support exporters in diversification and new market exploration.
• 25 fishery units are being cleared for Russia as a new market opportunity.
• Officials estimate that only $2 billion out of $8 billion in annual US exports can be redirected successfully.
• Trade talks with the US continue but no breakthrough has been reached yet.
Market Realities and Outlook
• Leather footwear exports fell 10% due to a sharp decline in US orders.
• Competitors like Indonesia (19% tariffs) and Ecuador (15%) are gaining market share compared to India’s 50% tariffs.
• Ongoing EU Free Trade Agreement (FTA) negotiations could reduce the current 12% tariffs further.
• India exported $1.1 billion in seafood to the EU in FY24, with 20-25% room for growth.
• The IMF lowered India’s FY26 GDP growth forecast to 6.2%, assuming tariff impacts continue.
This trade war and tariff escalation have reshaped India’s export landscape, highlighting the success of rapid diversification into Asia, the EU, and the Middle East to mitigate the adverse effects of US tariffs on key sectors in 2025
Source: https://www.thehindubusinessline.com/markets/share-market-nifty-sensex-live-updates-8th-dec-2025/article70368657.ece
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