The United States’ decision to impose an additional 25 per cent tariff on Indian goods — a penalty for New Delhi’s continued imports of Russian oil and weapons — has triggered alarm among exporters. The levy, which came into effect Wednesday, doubles the existing duties and threatens to undercut India’s access to its largest export market.

India shipped goods and services worth $86.5 billion to the US in FY25, with nearly two-thirds of that now subject to higher tariffs. According to the Federation of Indian Export Organisations (FIEO), the impact will be devastating, with $48 billion worth of shipments facing a 35 per cent pricing disadvantage against competitors from Vietnam, Bangladesh, and China, who face lower barriers.

FIEO President S.C. Ralhan pointed to sharp disruptions in textile hubs such as Tirupur, where production has already halted. Shrimp exporters, who depend on the US for 40 per cent of their market, are also bracing for steep losses. Industries such as leather, ceramics, handicrafts, and gems are seen as equally vulnerable.

Ralhan urged the government to provide relief through a moratorium on loan repayments and enhanced support for exporters. He also called for a fast-tracking of trade agreements to diversify India’s markets.

The Global Trade Research Initiative (GTRI) warned exports could plunge by 43 per cent in FY26 to below $50 billion, shaving nearly 1 per cent off India’s GDP. Government estimates earlier suggested a smaller impact of 0.2 per cent, but those projections are now outdated.

Meanwhile, a State Bank of India report noted the tariffs could backfire on Washington, raising input costs and shaving 40-50 basis points off US GDP.

Prime Minister Narendra Modi has maintained India will not compromise farmers’ interests, even as prospects of a $500 billion trade deal remain uncertain.

The United States’ decision to impose an additional 25 per cent tariff on Indian goods — a penalty for New Delhi’s continued imports of Russian oil and weapons — has triggered alarm among exporters. The levy, which came into effect Wednesday, doubles the existing duties and threatens to undercut India’s access to its largest export market.

India shipped goods and services worth $86.5 billion to the US in FY25, with nearly two-thirds of that now subject to higher tariffs. According to the Federation of Indian Export Organisations (FIEO), the impact will be devastating, with $48 billion worth of shipments facing a 35 per cent pricing disadvantage against competitors from Vietnam, Bangladesh, and China, who face lower barriers.

FIEO President S.C. Ralhan pointed to sharp disruptions in textile hubs such as Tirupur, where production has already halted. Shrimp exporters, who depend on the US for 40 per cent of their market, are also bracing for steep losses. Industries such as leather, ceramics, handicrafts, and gems are seen as equally vulnerable.

Ralhan urged the government to provide relief through a moratorium on loan repayments and enhanced support for exporters. He also called for a fast-tracking of trade agreements to diversify India’s markets.

The Global Trade Research Initiative (GTRI) warned exports could plunge by 43 per cent in FY26 to below $50 billion, shaving nearly 1 per cent off India’s GDP. Government estimates earlier suggested a smaller impact of 0.2 per cent, but those projections are now outdated.

Meanwhile, a State Bank of India report noted the tariffs could backfire on Washington, raising input costs and shaving 40-50 basis points off US GDP.

Prime Minister Narendra Modi has maintained India will not compromise farmers’ interests, even as prospects of a $500 billion trade deal remain uncertain.