US Tariffs on Indian Exports - Impact and Outlook
The US has imposed a 50% tariff on about $45 billion worth of Indian exports under Executive Order 14329, effective August 27, 2025. While the move initially triggered a selloff in Indian equities and a weaker rupee, analysts suggest the long-term impact on the Indian economy may be limited.
The US has imposed a 50% tariff on about $45 billion worth of Indian exports under Executive Order 14329, effective August 27, 2025. While the move initially triggered a selloff in Indian equities and a weaker rupee, analysts suggest the long-term impact on the Indian economy may be limited.
According to SBI Research (Dr. Soumya Kanti Ghosh), labor-intensive sectors like textiles and gems & jewellery face the most pressure. The US is India’s largest market for both sectors, textiles account for 12% of India’s exports, and gems & jewellery contribute nearly one-third of their annual shipments ($28.5 billion). Higher tariffs may erode India’s competitiveness against peers like Vietnam, China, and Switzerland. Seafood exports, particularly shrimp, are also at risk of order cancellations, reducing India’s edge over Ecuador.
In contrast, pharmaceuticals, smartphones, semiconductors, and steel remain largely unaffected due to exemptions, existing tariff regimes, and strong domestic demand.
Market analysts remain cautiously optimistic. Harshal Dasani (INVasset PMS) notes that the selloff is mostly sentiment-driven, as Indian macro fundamentals, steady crude oil, robust growth, fiscal incentives, and improving trade ties, remain supportive. He sees tariff-related dips as buying opportunities. Similarly, Dr. V.K. Vijayakumar (Geojit Investments) expects foreign outflows but believes domestic investors will step in, cushioning any downside.
Justin Khoo (VT Markets) highlights that the heaviest impact will be seen in textiles, gems, footwear, furniture, and chemicals, while pharma and electronics will escape major disruption.
Bottom Line
While the tariffs create short-term headwinds for select sectors, experts agree that the impact on overall corporate earnings and India’s long-term growth story will be limited. Domestic consumption remains resilient, and negotiations toward a possible US-India trade deal could ease concerns by year-end.
Sources: SBI Research, Business Today, VT Markets, INVasset PMS, Geojit Investments
