New Delhi, August 27, 2025 — India is staring at a major trade disruption after the United States imposed sweeping tariffs that threaten to impact $48.2 billion worth of Indian exports. With key sectors like textiles, seafood, leather, and gems & jewellery under direct threat, the Indian government is urgently crafting a strategy to minimize losses and explore alternative global markets.
Exporters in labor-heavy hubs such as Tiruppur, Noida, and Surat have already begun slowing production, citing the rising challenge from low-cost competitors like Vietnam and Bangladesh. Seafood exporters, particularly in shrimp, anticipate serious consequences, as nearly 40% of India’s seafood exports head to the U.S.
The fresh tariffs — totaling 50%, with 25% attributed to India’s continued oil purchases from Russia and another 25% as part of broader trade penalties — came into effect in two phases: August 7 and August 27. These measures could lead to a sharp decline in India’s exports to the U.S., from $86.5 billion in FY2025 to a projected $49.9 billion in FY2026, according to The Economic Times.
High-Level Government Action Underway
Government officials confirmed that high-level meetings are ongoing to formulate a multi-pronged response. Key proposals under consideration include:
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Reforms in Special Economic Zones (SEZs)
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Expansion of the Export Promotion Mission
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Financial relief for exporters, including moratoriums on loan repayments
“We must pivot quickly,” said a senior official. “India needs to deepen trade relations with the European Union, Gulf countries, UK, East Asia, and the Eurasian Economic Union. Russia has also expressed interest in opening its markets further to Indian products.”
Exploring Domestic Buffers and Global Diversification
Economists suggest that India could support affected industries—such as textiles and seafood—through targeted subsidies and domestic demand stimulation. While 70% of impacted exports include labor-intensive goods like garments, leather, and shrimp, around 30% of items such as pharmaceuticals and electronics remain duty-free.
“Immediate diversification is essential,” said trade analyst P. Mehra. “We must strengthen our foothold in non-U.S. markets while providing liquidity support to exporters during this transition.”
What India Exports to the U.S.
India’s top exports to America include:
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Pharmaceuticals and medical supplies
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Gems and jewellery
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Textiles and apparel
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Seafood (especially shrimp)
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Leather and footwear
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Engineering goods
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Basmati rice and home decor products
With U.S. tariffs skewed heavily against labor-intensive and high-volume categories, India’s export sector faces a challenging year ahead—unless swift policy action and market reorientation are achieved.