August 4, 2025

Indian exporters are facing a significant challenge following the announcement of a 25% tariff on goods imported from India by the United States, effective August 7. This steep tariff places Indian exporters at a disadvantage compared to competitors from countries like Bangladesh, Pakistan, Vietnam, and Turkey, whose tariffs range between 15% and 20%. The new tariff regime, along with an unclear penalty structure, has raised concerns among exporters, leading many to fear potential order cancellations from US buyers. In light of these concerns, exporters from various sectors including textiles, steel, engineering goods, and agricultural products recently convened with Commerce and Industry Minister Piyush Goyal. During this series of meetings, they underscored the need for immediate government intervention, specifically through an Export Promotion Mission, market support initiatives for US-bound goods, and an interest equalization scheme for pre- and post-shipment export credit. An official involved in the discussions noted, "Exporters expressed significant worry regarding the adverse effects of the new tariffs. They are appealing for supportive measures to help mitigate the impact on their businesses." The harsh 25% duty could negatively affect almost half of the $85 billion worth of goods that India exports to the US, with industry stakeholders warning of severe consequences if support is not quickly rendered. A representative from the textile sector pointed out, "The problem with a 25% duty is that it gives our competitors an unfair price advantage. If tariffs were around 20%, the burden could be more evenly distributed among importers, exporters, and consumers. However, the current rate is so high that it necessitates fiscal support through higher incentives under existing schemes." The textile industry is particularly alarmed, as the US accounts for approximately a third of India's total textile exports. Industry insiders fear layoffs and significant losses in business if the situation does not improve. The representative commented, "The US market tends to be price-sensitive, especially with core items like T-shirts and home textiles. The impact of these tariffs will become apparent as we enter the September peak season for textiles." In fiscal 2025, the US was India’s largest export destination, accounting for shipments worth $87 billion, which is roughly 20% of India's total exports of $437 billion. Goyal emphasized the importance of collaboration during his meetings in Mumbai, stating on social media, "Had an insightful interaction today with leading industry captains from India’s vibrant textiles sector. We discussed bold ideas to enhance global competitiveness, sustainability, and innovation. Together, we’re weaving India’s rise as a global textiles powerhouse." Additionally, discussions with major steel producers focused on strategies to improve production and reduce logistics costs. Goyal expressed optimism, stating, "We are looking forward to developing a collaborative roadmap to strengthen and future-proof India’s steel industry." Despite these productive dialogues, the uncertainty surrounding the tariff penalty remains a barrier. One industry representative commented that without clarity on the penalties imposed under the 'Russian import-linked' guidelines, many potential buyers are hesitant to place orders. Concerns over the unknown landed price and duty complicate the situation further, exacerbating the challenges faced by Indian exporters. As the situation unfolds, both exporters and industry leaders continue to seek solutions to bolster their competitiveness in an increasingly challenging global market, hoping that government support will help mitigate the impact of unfavorable tariffs imposed on Indian goods by the US.

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Tags: Exporters, Tariffs, Us market, Piyush goyal, Textile industry, Steel industry,