Exporters feel the jitters as US keeps India on tenterhooks
About 53% of India’s US exports are affected by the increased tariffs.
India is grappling with growing uncertainty as it awaits a definitive word from Washington on the next round of negotiations for the proposed bilateral trade agreement (BTA) and prepares for the potential doubling of US tariffs on Indian goods to 50 per cent on August 27.
The precarious situation has triggered widespread concern among Indian exporters who report order cancellations and demands for deep discounts from American buyers.
“The US has not yet provided a new date for the next round of BTA talks after it unexpectedly postponed its trade team’s scheduled visit to New Delhi on August 25. The looming August 27 deadline, when the tariffs are set to increase from 25 per cent to 50 per cent, has now become the immediate point of focus for the Indian industry,” a source tracking the matter told businessline. While a tariff hike (a penalty on India for buying Russian oil) is imminent, there is a slim hope that the ongoing US-Russia talks on the Ukraine war might offer a last-minute reprieve.
The impact of the initial 25 per cent reciprocal tariffs imposed on August 7 has already been severe. “The situation is quite grim. Exporters are facing cancellations or steep discounts of 20 – 25 per cent for this current season. The exporters and buyers also know that these heavy discounts are not sustainable, hence both are looking at other options,” said Chennai-based leather goods exporter Israr Ahmed.
This sentiment is echoed across sectors, with labour-intensive industries like textiles, handicrafts, leather, gems and jewellery and footwear particularly vulnerable.
While the garments and textiles sector had braced for a 25 per cent reciprocal tariff, the prospect of a 50 per cent duty is simply “unworkable”, said Mithileshwar Thakur from the Apparel Export Promotion Council.
“The additional duties would put Indian apparel at a severe 30-31 percentage tariff disadvantage against competitors like Bangladesh, Vietnam, Sri Lanka, Cambodia and Indonesia. This would completely drive Indian apparel business out of the US market leading to financial stress and massive job losses,” he said.
In response, the industry is urgently seeking fiscal support from the government to help sustain and survive in the US market until a favourable BTA can be reached. “Timely support from the government is extremely critical as it is not easy to regain market share, once lost,” Thakur said.
The government is already working on a support package under the Export Promotion Mission to provide affordable credit and other incentives to improve market access and there is likely to be more focus on items hit by the US tariffs.
India’s annual exports to the US in FY25 were valued at $86.7 billion, which was about a fifth of the country’s total goods exports. About 53 per cent of the country’s US exports are affected by the increased tariffs.
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Published on August 24, 2025
