NEW DELHI: With the US imposing a massive 50% tariff on Indian products, the affected sectors—primarily textiles, gems & jewellery, and MSMEs—have warned of a possible disruption of critical supply chains, plummeting exports, and thousands of job losses. These sectors have also sought both fiscal and non-fiscal support from the government. However, government officials and industry experts say any support would fall short of offsetting the business losses caused by the high tariffs.
On Wednesday, the US imposed an additional 25% tariff over and above the earlier-announced 25% tariff on Indian exports, to penalise India for its continued crude oil imports from Russia. The first 25% tariff took effect on Thursday, while the second levy will kick in on August 27.
A senior official from the Apparel Export Promotion Council (AEPC) said businesses might have stayed afloat with 25% tariff by absorbing 10-15% of it through margin cuts. “But with a 50% tariff, doing business with the US has become unviable. Many MSMEs will shut shop,” the official said, warning that lakhs of jobs are at risk.
The impacted sectors have sought relief measures such as deferment of interest on working capital, permission for SEZs to sell in the domestic market, and short-term relief packages similar to those introduced during the Covid-19 pandemic.
However, insiders say that even if the government steps in, it cannot bridge the cost gap.
Indian exports to the US stand around $87 billion, accounting for 20% of its total exports. Estimates suggest that 40-50% of these exports could be affected. India’s top exports to the US include electronics (including smartphones), pharmaceuticals, gems & jewellery, textiles, organic chemicals, and machinery. While smartphones and pharmaceuticals enjoy zero tariffs now, most other sectors are subject to a 50% or higher duty.
The US is the largest market for India’s garment exports, with exports worth $5.33 billion in FY25.
The gems and jewellery sector exported goods worth $12 billion to the US in FY25 and now faces a 50% duty. “The US is our single largest market,” said Kirit Bhansali, chairman, GJEPC.
The MSME sector is also feeling the heat. “The additional 25% penalty could cut exports by halfMSMEs exporting to the US,” said Anil Bhardwaj, secretary-general, FISME.
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