India’s exports to the United States experienced a significant decline in September 2025, marking the first full month under the imposition of 50% tariffs on key products. According to a report by the Global Trade Research Initiative (GTRI), while August figures only partially reflected tariff hikes due to phased tariff increases throughout the month, September saw all Category C exports face the full 50% duty. These high tariffs have severely impacted traditionally strong sectors such as textiles, gems and jewellery, shrimp, chemicals, and solar panels, causing noticeable contractions in export volumes. This downturn follows three consecutive months of falling exports to the U.S., driven mainly by the steep tariff escalation .
Labour-Intensive Sectors Hit Hardest by Tariff Increases:
The GTRI report highlighted that exports in Category C — which account for more than 62% of India’s shipments to the U.S. — fell sharply by 10.8%, dropping from USD 4.82 billion in May to USD 4.30 billion in August 2025. Labour-intensive sectors, which are particularly vulnerable to pricing pressures, have borne the brunt of the tariff impact. The contraction in these sectors underscores the challenge of competing in international markets when faced with such significant tariff disadvantages. Additionally, the decline has extended beyond tariffed products, with even tariff-free exports such as smartphones and pharmaceuticals suffering unexpected downturns, threatening the progress made under India’s flagship production-linked incentive (PLI) program .
Sharp Contraction in Tariff-Free Exports:
A surprising development noted in the report is the sharp contraction in tariff-free exports, which made up nearly 28.5% of India’s exports to the U.S. in August. These exports plummeted by 41.9%, from USD 3.37 billion in May to USD 1.96 billion in August. Analysts attribute this dramatic fall partly to frontloading by exporters trying to anticipate tariff hikes, which created volatility and a subsequent slowdown in shipments during September. The drop in tariff-free products is a concerning signal for the overall health of India-U.S. trade relations and risks undermining policy achievements aimed at boosting high-value manufacturing and exports.
Ongoing India-U.S. Trade Negotiations to Address Tariff Challenges:
Amid the export slump triggered by the 50% tariffs, India’s Commerce and Industry Minister Piyush Goyal is scheduled to visit the United States on September 22, 2025, to accelerate talks aimed at concluding a long-pending bilateral trade agreement. Recent meetings between U.S. and Indian trade officials have been described as “positive” and “forward-looking,” with both sides agreeing to intensify efforts for an early deal that benefits both economies. However, unresolved issues remain, including U.S. demands for India to open agricultural and dairy markets and concerns over India’s imports of Russian oil, which led to punitive tariffs. The visit is seen as a critical juncture to bridge gaps and potentially roll back tariffs, offering hope for stabilizing and enhancing India-U.S. trade relations in the near future.
Calls for Government Support and Trade Negotiation Challenges:
Industry bodies have called on the Indian government to swiftly introduce relief measures to offset the adverse impact of tariffs. Suggestions include interest subsidies under the interest equalisation scheme, accelerated duty remission, and enhanced liquidity support for exporters. While some GST rate reductions have been enacted to stimulate domestic consumption, export-specific relief remains insufficient. On the diplomatic front, India is set to maintain a firm stance protecting its sensitive sectors such as agriculture, dairy, genetically modified feed, and regulatory sovereignty amid ongoing U.S. demands in trade negotiations. The continuation of tariff pressures underscores a complex trade environment requiring careful balancing of domestic interests and bilateral trade commitments .
In summary, India’s exports to the U.S. have taken a sharp hit in September 2025 due to the full imposition of 50% tariffs on a broad range of products, with both tariffed and tariff-free sectors feeling the impact. Industry calls for government intervention reflect the urgent need to support exporters as trade talks remain challenging .
