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India’s export pipeline worth $86.5 billion to United States, is bracing for a sharp shake-up. Starting August 27, 2025, a sweeping 50% tariff will hit most Indian goods entering the US, threatening a range of sectors from garments and gems to shrimp and leather.
50% Tariffs from 9:30 am IST
The US Department of Homeland Security has notified that higher tariffs will apply to goods “entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. EDT (9:30 am IST) on August 27, 2025.”
Certain products, including pharmaceuticals, energy items, and electronics, will remain exempt. Shipments already loaded on vessels before this deadline will also be spared if certified properly.
Impact is visible – production has begun to halt
“Textiles and apparel manufacturers in Tirupur, Noida, and Surat have halted production amid worsening cost competitiveness,” federation of Indian Export Organisations (FIEO) President S C Ralhan said according to PTI. FIEO stated that about 55 per cent of India’s US-bound shipments could face pricing disadvantages of 30–35 per cent, making them uncompetitive compared with rivals from Vietnam, Bangladesh, and China.
Shrimp exports worth $ 2.4 billion, gems and jewellery exports of $10 billion, and textiles and apparel exports of $10.8 billion are expected to feel the biggest impact, according to GTRI.
Diamond sector reels under tariffs
In Surat, the world’s diamond hub, business has slowed sharply. Orders are drying up, and smaller exporters are offering steep discounts to stay afloat. Some big traders are considering shifting operations to Botswana, which faces a lower 15 per cent US tariff. Shaunak Parikh, vice chairman of GJEPC, warned that 150,000 to 200,000 jobs could be at risk if the tariffs continue.
Garment industry growth to slow this fiscal: Crisil Ratings
Crisil Ratings has projected that India’s readymade garment industry growth will slow to 3–5 per cent this fiscal, nearly half of last year’s pace. Crisil highlights that the US accounts for a third of garment exports, and the new 50 per cent tariff could sharply reduce shipments. “Profitability of RMG exporters dependent on the US could contract 300–500 basis points as they bear the tariff brunt,” said Crisil Deputy Chief Rating Officer Manish Gupta.
Carpets and Handicrafts face competition from Turkey, Vietnam
Several other sectors are set to feel the impact of the new tariffs: carpets ($1.2 billion) and handicrafts ($1.6 billion) may lose market share to Turkey and Vietnam, while agrifood exports ($6 billion), including basmati rice, spices, and tea, could see U.S. demand shift to Pakistan and Thailand. Other affected segments include steel, aluminium, and copper ($4.7 billion), organic chemicals ($2.7 billion), and machinery ($.7 billion).
How can India temporarily avoid 50% tariff?
According to the US draft order, Indian goods can escape the new 50% tariff if:
- They were shipped and already in transit to the US before 12:01 am (EDT) on August 27, 2025.
- The consignments are entered for consumption—or cleared from a US warehouse—by 12:01 am (EDT) on September 17, 2025.
- Importers certify eligibility for the in-transit exemption by filing the shipment under the special tariff code HTSUS 9903.01.85 with US Customs.
Exports to drop to $49.6 billion in FY26: GTRI
Recent GTRI reports highlight that 66 per cent of Indian exports to the US, amounting to $60.2 billion, will face a prohibitive 50 per cent duty. Another 4 per cent ($3.4 billion), mainly auto component shipments, will attract 25 per cent duties. Only 30 per cent ($27.6 billion) of exports, including pharmaceuticals, APIs and electronics, will continue to enter duty-free. GTRI’s Founder Ajay Srivastava said that India’s exports to the US could see a sharp fall to around $49.6 billion in FY2026 following Washington’s new tariff regime.
Competitors gain edge with lower tariffs
After the new levy, India’s competitors will be better placed in the US market due to lower duties. India’s competitors include Myanmar (40 per cent US tariff), Thailand and Cambodia (both 36 per cent), Bangladesh (35 per cent), Indonesia (32 per cent), China and Sri Lanka (both 30 per cent), Malaysia (25 per cent), the Philippines and Vietnam (both 20 per cent). Brazil is the only US trading partner which is facing a 50 per cent import duty.
Why has Trump imposed 50% tariff on India?
Earlier this month, White House Press Secretary Karoline Leavitt said that US President Donald Trump imposed sanctions on India in a bid to push for an end to the Russia-Ukraine conflict. US Treasury Secretary Scott Bessent, meanwhile, accused India of profiteering by reselling Russian oil.
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