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India’s merchandise exports to the United States are projected to decline by a staggering $ 5.76 billion this year, primarily due to the rise in tariffs imposed by the US.
According to a report by the Global Trade Research Initiative (GTRI), exports from key sectors such as marine items, gold, electronics, and electrical products are expected to bear the brunt of the tariff hike, as reported new agency PTI. However, India’s competitive edge in certain product segments could help mitigate some of these losses.
Major declines in electronics, seafood, and gold exports expected
The US has announced a 26% additional tariff on Indian goods (excluding pharmaceuticals, semiconductors, and certain energy products) starting April 9. This move comes on top of the 10% baseline tariffs that have been in effect from April 5-8. According to GTRI, the total impact will result in a 6.41% drop in India’s exports to the US in 2025, following a strong export performance of $ 89.81 billion in 2024.
The sectors likely to face major losses include fish and crustaceans (a 20.2% decline), iron and steel articles (down by 18%), diamonds and gold products (a 15.3% drop), vehicle and parts exports (12.1% reduction), and electronics and telecom products (12% decline). Other categories such as plastics, carpets, petroleum products, and machinery are also expected to suffer.
Textiles and pharmaceuticals resilient
Despite these setbacks, some sectors are projected to experience modest gains. Products like textiles, apparel, ceramic items, inorganic chemicals, and pharmaceuticals may perform better due to India’s established competitive position in these categories.
High-value products such as energy goods, including petroleum, solar panels, and pharmaceuticals, remain exempt from these specific tariffs, and they accounted for $ 20.4 billion (22.7%) of India’s total exports to the US in 2024. These goods will continue to face only the standard Most Favoured Nation (MFN) tariffs.
However, the largest impact is anticipated to fall on a broad basket of goods valued at $ 67.2 billion, which will now be subject to the 26% tariff increase. This sweeping hike will likely reshape trade dynamics across numerous industries.
India’s electronics and smartphones exports to the US, which reached $ 14.4 billion in 2024 (accounting for 35.8% of its global shipments in this category), are expected to see a significant decline. The new tariff hike could reduce these exports by 12%, or $ 1.78 billion, placing pressure on India’s position as the fourth-largest supplier of electronics and smartphones to the US.
Seafood exports from India are also likely to suffer greatly. The US imported $ 2 billion worth of frozen fish and shrimp from India in 2024, which previously entered the market duty-free. With the new 26% tariff, seafood exports are expected to fall by 20.2%, or $ 404.3 million, as Indian products now face stiff competition from Canada, which benefits from a tariff exemption under the USMCA trade pact.
Gold, auto parts, and diamonds
Exports of gold jewellery and cut and polished diamonds to the US are projected to decline by 15.3%, or roughly $ 1.82 billion. The new tariffs, combined with India’s relatively low value addition in this sector, will likely erode its share of the US market, which accounted for 40% of India’s total exports of these products in 2024.
Similarly, vehicle and auto parts exports, valued at $ 2.8 billion in 2024, are expected to fall by 12.1%, or $ 339.4 million, under the new tariff regime. Currently, the import duty on these products stands at just 1%, but with the tariff hikes, the sector is poised for a slowdown.
A complex picture with multiple variables ahead
GTRI notes that the analysis is based on detailed data, but it does have its limitations. The study assumes that exchange rates, global demand, and other variables remain constant, which may not be the case in real-world scenarios. Additionally, the study does not take into account how quickly Indian exporters can adapt to these changes, shift markets, or adjust pricing strategies in response to the new tariffs.
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