Indian Exports to US Plummet 28.5% Amid Rising Tariffs

India's exports to the United States have experienced a significant decline of 28.5% between May and October 2025, primarily due to substantial tariff increases implemented by the US government. According to a report by the Global Trade Research Initiative (GTRI), the value of shipments dropped from $8.83 billion to $6.31 billion during this period, coinciding with an aggressive rise in tariffs from 10% in April to 25% in early August, and reaching 50% by late August.

The GTRI has highlighted that this sudden increase in tariffs has rendered Indian goods some of the most heavily taxed in the US market. In comparison, China is currently facing tariffs of about 30%, while Japan's tariffs are around 15%.

Breakdown of Exports

The GTRI categorised the exports into three distinct segments. Tariff-exempt items, which include smartphones, pharmaceuticals, and petroleum products, constituted 40.3% of the October exports but still saw a decline of 25.8%. Exports in this category fell from $3.42 billion in May to $2.54 billion in October.

Uniform global tariff items, such as iron, steel, aluminium, copper, and auto parts, represented 7.6% of the total shipments and decreased by 23.8%, dropping from $629 million to $480 million. However, the most significant impact was felt in labour-intensive sectors, including gems and jewellery, solar panels, textiles, garments, chemicals, and seafood, which faced the maximum tariff rate of 50%. Exports in this sector plummeted by 31.2%, resulting in a loss of nearly $1.5 billion.

Even categories that are exempt from tariffs did not escape the adverse effects. Smartphone exports, which are the largest product line for India to the US, fell by 36%, decreasing from $2.29 billion in May to $1.50 billion in October. Monthly shipments showed a dramatic decline over the five-month period, although there was a slight recovery in October. Pharmaceutical exports saw a modest dip of 1.6%, while petroleum products fell by 15.5%.

Calls for Policy Action

The GTRI has noted that the decline in metals and auto parts is attributed more to weak demand in the US industrial sector, as tariff treatment was consistent across all suppliers. In light of these developments, the think tank has urged the Indian government to act quickly by operationalising the Export Promotion Mission and negotiating with the US to remove an additional 25% duty related to Russia on Indian products.

The Export Promotion Mission, which was announced in March 2025 and approved on November 12, is yet to be operational. The GTRI has pointed out that delays in implementing schemes and disbursals could jeopardise the mission's objectives. "Nearly eight months into the fiscal year, no schemes are operational, while longstanding programmes such as the Market Access Initiative and the Interest Equalisation Scheme have made no payments this year," the GTRI stated.

The initiative has a budget of Rs 25,060 crore for the period from 2025-26 to 2030-31, aimed at supporting micro, small, and medium enterprises, first-time exporters, and sectors that rely heavily on labour. The think tank believes that removing the extra tariff could effectively halve the US tariff burden to 25%, providing crucial relief to Indian exporters.