India’s exports to the United States have recorded a steep fall of 37.5 percent over a four-month period following Washington’s imposition of 50 percent tariffs on most Indian goods, according to a latest report by the Global Trade Research Initiative (GTRI). Shipments to the US declined from USD 8.8 billion in May 2025 to USD 5.5 billion in September 2025, marking the sharpest and most sustained fall of the year. GTRI emphasized that September was the first full month during which Indian goods faced the 50 percent tariff and saw exports tumble by 20.3 percent compared to August’s USD 6.87 billion, reflecting the steepest single-month decline in 2025.
Textiles, Gems, and Engineering Goods Worst Hit:
The sharp drop has had a significant effect on India’s main export industries, which together account for an important portion of shipments to the US: textiles, chemicals, gems and jewelry, and engineering items. Among these, exports of jewelry and diamonds saw an apparent drop as a result of increased landed costs and decreased competitiveness. Tariffs have increased the cost of Indian goods relative to alternatives from Bangladesh and Vietnam, further straining the textile industry, which is already under pressure from changes in global demand. Exports of chemicals and engineering items also saw a double-digit decline, which heightened worries about job losses and slowed industrial growth. According to the report, these sectors are essential for creating jobs, and thousands of MSMEs that rely on US trade orders would probably be impacted if they continued to decline.
Policy Response and Trade Diversification Efforts Underway:
The GTRI report noted that India’s exports have lost over USD 3.3 billion in monthly value between May and September 2025, making the US India’s most adversely impacted export destination since the tariff escalation began. The Indian government has been taking steps to mitigate the adverse effects of tariffs, including incentivizing exporters, pushing for trade diversification, and accelerating trade agreement talks with the US. Commerce Secretary Rajesh Agrawal confirmed that negotiations are ongoing to conclude a bilateral trade deal that could potentially reduce tariffs and stabilize the trade relationship by next month. Analysts emphasize the importance of India expanding into alternative markets such as the European Union, Latin America, and Africa to reduce over-reliance on the US as a trading partner.
Long-Term Implications and Outlook for India-US Trade:
Experts view the tariff-induced decline as a wake-up call for India’s export strategy, urging greater emphasis on domestic value addition and enhanced competitiveness. The tariff issue has emerged amid broader geopolitical tensions, including the US concerns over India’s continued imports of Russian oil and local market barriers. While officials remain optimistic about resolving pending trade issues, the short-term impact is expected to weigh heavily on India’s export growth for the remainder of FY2025. To counter the decline, economists suggest policy measures such as targeted export incentives, tax rationalization, and strategic engagement in high-value sectors like electronics, semiconductors, and renewable technologies. As both New Delhi and Washington work toward a balanced trade outcome, addressing tariff concerns swiftly will be crucial to safeguard India’s export momentum and employment-linked sectors in the months ahead.
