India's exporters brace for tariff impact

MUMBAI/NEW DELHI — Indian exporters are bracing for disruptions after the US said it would impose an additional 25 percent tariff on all Indian-origin goods from Wednesday, ramping up trade pressure on the Asian nation.

Indian exports will face US duties of up to 50 percent — among the highest imposed by Washington — after US President Donald Trump announced extra tariffs for the purchases of Russian oil.

The new duties will apply to goods entering the US for consumption or withdrawn from warehouses from Wednesday, according to the US Homeland Security notice.

Trump issued a three-week deadline on Aug 6, which is expected to take effect on Wednesday morning in India.

India's Commerce Ministry did not immediately respond to a request seeking comment on the latest notification, Reuters reported.

The United States was India's top export destination in 2024, with shipments worth $87.3 billion.

Analysts at Nomura warn that 50 percent duties would be "akin to a trade embargo", devastating smaller firms with "lower value add and thinner margins".

Elara Securities' Garima Kapoor said no Indian product can "stand any competitive edge" under such heavy import taxes.

Economists estimate tariffs could shave 70 to 100 basis points off India's GDP growth this fiscal year.

Exporters of textiles, seafood and jewelry are already reporting canceled US orders and losses to rivals, raising fears of heavy job cuts.

"The US customers have already stopped new orders. With these additional tariffs, the exports could come down by 20-30 percent from September onward," said Pankaj Chadha, chairman, Engineering Exports Promotion Council.

Chadha said the government has promised financial aid, including increased subsidies on bank loans and support for diversification in the event of financial losses.

"However, exporters see limited scope for diversifying to other markets or selling in the domestic market," he said.

Earlier this year, after five rounds of trade negotiations, Indian officials said they were confident of securing a favorable deal with the US.

Officials on both sides said a mix of political misjudgment, missed signals and bitterness broke down the deal between the two economies, whose bilateral trade is worth over $190 billion, Reuters reported.

Indian Prime Minister Narendra Modi has vowed not to compromise the interests of the country's farmers even if there is a heavy price to pay.

Agencies Via Xinhua