New Delhi | The additional 25 per cent import duty announced by US President Donald Trump on Indian goods could lead to a 30 per cent decline at USD 60.6 billion in India's exports to America this fiscal, think tank GTRI said on Monday.
To help exports, it suggested the government to revive the interest equalisation scheme, create a helpdesk, use trade agreements strategically, and onboard new exporters.
India now faces a 25 per cent country-specific tariff and an extra unspecified penalty on its exports to the United States -- one of the highest among Asian exporters, second only to China at 30 per cent.
In contrast, competitors such as Vietnam (20 per cent), Bangladesh (18 per cent), Indonesia, Malaysia, and the Philippines (19 per cent), and Japan and South Korea (15 per cent) enjoy lower rates.
This puts Indian exports at a clear disadvantage across most sectors, barring a few exemptions, the Global Trade Research Initiative (GTRI) said.
The new US tariff regime excludes pharmaceuticals, energy products, critical minerals, and semiconductors.
"But outside these, Indian goods are under pressure. As a result, India's exports to the US -- currently its largest export market -- are projected to decline by nearly 30 per cent, falling from USD 86.5 billion in FY2025 to around USD 60.6 billion in FY2026," it said.
GTRI Founder Ajay Srivastava said India's garment exports are among the worst hit.
Knitted and woven garments -- each worth USD 2.7 billion -- now face steep US tariffs of 38.9 per cent and 35.3 per cent, much higher than the rates for Vietnam, Bangladesh, and Cambodia, GTRI said, adding made-up textiles like towels and bedsheets, which earn India USD 3 billion in exports (with nearly half going to the US), now face a 34 per cent duty.
This gives a clear advantage to competitors like Pakistan and Vietnam, he said.
He also said that India's USD 2 billion shrimp exports, which make up 32 per cent of global supply, will now face a 25 per cent US tariff.
This wipes out their price edge over rivals like Canada and Chile, who benefit from free trade deals with the US, he added.
Jewellery exports worth USD 10 billion -- 40 per cent of India's global jewellery trade -- now face a 27.1 per cent duty. With the sector adding just 3-4 per cent in value, margins are thin. Mechanical gold jewellery exports to the US (USD 3.6 billion) are likely to be hit the hardest.
India's USD 4.7 billion in metal exports -- mainly steel, aluminium, and copper -- will also suffer, as the higher cost is expected to curb demand from US infrastructure and energy buyers, the think tank said.
India's engineering exports -- USD 6.7 billion in machinery and USD 2.6 billion in auto parts -- now face over 26 per cent US tariffs, making them costlier than similar goods from Mexico (zero tariff) and Japan (15 per cent).
Petroleum exports worth USD 4.1 billion are still tariff-free, but India's use of Russian crude could invite penalties, he said, adding pharmaceuticals (USD 9.8 billion) and smartphones (USD 10.6 billion) are currently exempt, but not safe -- Trump has warned of tariffs on Indian medicines and tighter rules on electronics with Chinese parts.
He added that exporting more to other countries to make up for losses in the US market won't be easy.
Further, he said Trump's 27.1 per cent tariff on India's USD 10 billion diamond and jewellery exports, 40 per cent of its global trade in the sector -- delivers a "heavy blow" to the sector.
With value addition barely 3-4 per cent, margins are wafer-thin, and such duties can turn exports instantly unviable.
"Mechanical gold jewellery, worth USD 3.6 billion, is set to be hit hardest. In diamonds, the impact is even more complex. India exports USD 4.9 billion worth of cut and polished diamonds to the US, but US imports show only USD 2.5 billion -- because buyers select a fraction and return the rest," Srivastava said.
"Interest Equalisation Scheme discontinued last year despite its low fiscal cost. GTRI recommends relaunching the scheme with a Rs 15,000 crore annual budget and a five-year commitment to provide subsidised credit for exporters, especially MSMEs. This would lower borrowing costs, improve competitiveness, and provide immediate relief," he said.
