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India’s exports to US could decline by $5.76 billion this year due to high tariffs: GTRI

PTI
Updated: April 7th, 2025, 11:48 IST
in Business
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New Delhi: India’s merchandise exports to the US from sectors such as marine items, gold, electrical, and electronics are expected to decline by USD 5.76 billion this year due to increased American duties, according to the data analysis of think tank GTRI.

However, it added that India’s competitive position in select product segments may help cushion some of the losses.

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Sectors which can witness modest gains include textiles made-up, apparel, ceramic products, inorganic chemicals, and pharmaceuticals.

The US has announced an additional 26 per cent duty on Indian goods barring pharma, semiconductors and certain energy goods from April 9. The 10 per cent baseline tariffs are there from April 5-8.

“Using detailed trade data and tariff schedules, the analysis estimates that India could see a decline of USD 5.76 billion, or 6.41 per cent, in exports to the US in 2025,” Global Trade Research Initiative (GTRI) said.

In 2024, India exported USD 89.81 billion worth of goods to the US.

It said that several key product groups are likely to see reductions. Exports of fish and crustaceans may fall by 20.2 per cent; iron or steel articles by 18 per cent; diamonds, gold products by 15.3 per cent; vehicle and parts exports by 12.1 per cent; and electrical, telecom, and electronic products may decline by 12 per cent.

Other categories such as plastics, carpets, petroleum products, organic chemicals, and machinery are also expected to be negatively impacted, it added.

The study has evaluated sector-specific exposure, changes in tariff rates, and competitive dynamics involving key players like China, Mexico, and Canada.

According to the Delhi-based think tank, energy products, including petroleum, solar panels, and pharmaceuticals as well as copper, have been exempted from country-specific tariffs.

These high-value items accounted for USD 20.4 billion or 22.7 per cent of India’s exports to the US in 2024. They will continue to face only the standard MFN (Most Favoured Nation) tariff.

Key industrial goods such as steel, aluminum, automobiles, and auto parts will face a 25 per cent tariff. These represent USD 2.2 billion, or 2.5 per cent of India’s total exports to America, with no change to their MFN status.

“However, the largest impact falls on the remaining basket of goods. These exports valued at USD 67.2 billion or 74.8 per cent of total trade. They will now be hit with a 26 per cent tariff. While MFN tariffs still apply, this sweeping hike is expected to reshape trade dynamics across a wide range of industries,” GTRI Founder Ajay Srivastava said.

Explaining in detail, he said India’s exports of electronics and smartphones to the United States reached USD 14.4 billion in 2024, accounting for a significant 35.8 per cent of its global shipments in this category.

While the average import duty on these products is just 0.4 per cent, Indian goods are now set to face a steep duty, raising concerns about the competitiveness of its exports in the American market, it said, adding India currently ranks as the fourth-largest supplier of electronics and smartphones to the US, behind China, Mexico, and Vietnam, with a 6.68 per cent share.

“We estimate that the impact of the tariff hike (on electronics and smartphones ) could reduce India’s exports to the US by 12 per cent, or roughly USD 1.78 billion,” he said, adding India’s exports of machinery and mechanical appliances are likely to decrease by 2 per cent or by USD 142.1 million in 2025.

These exports from India stood at USD 7.1 billion in 2024.

It added that India’s seafood exports may be hit hard by the new tariffs.

The US imported USD 2 billion worth of Indian frozen fish and shrimp last year, making up nearly a third of India’s global exports in this category.

“These products, which previously entered duty-free, now face a 26 per cent tariff. India, the third-largest seafood supplier to the US after Canada and Chile, is projected to lose ground. Exports are expected to fall by 20.2 per cent, or USD 404.3 million especially as Canadian products remain tariff-free under the USMCA trade pact,” it said.

On gold jewellery and cut and polished diamonds, the analysis stated that given India’s relatively low value addition in this sector and the heavy new tariffs, exports are projected to fall by 15.3 per cent, or roughly USD 1.82 billion.

India exported USD 11.9 billion worth of gold jewellery and cut and polished diamonds to the US in 2024, with America accounting for 40 per cent of India’s global exports in this category. The sector at present have 2.1 per cent duty.

Similarly, the country’s outbound shipments in vehicle and auto components category are projected to fall by 12.1 per cent, or roughly USD 339.4 million.

India exported USD 2.8 billion worth of vehicles and auto parts to the United States in 2024, with the US accounting for 12.7 per cent of India’s global exports in this category. The import duty on this is one per cent at present.

Further, GTRI said that while this assessment provides a structured and data-driven estimate of the impact of new tariffs, it has several limitations.

“Most importantly, it assumes that all other factors such as exchange rates, global demand, supply chain dynamics, non-tariff barriers and even US tariffs remain constant, which may not hold true in real-world trade scenarios,” it said, adding the report also does not account for how quickly Indian exporters can adapt, shift markets, or adjust pricing strategies in response to tariff changes.

PTI

Tags: exportGTRIIndiaTariffTradeUS
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