India’s export landscape has faced significant challenges following a series of escalating tariffs imposed by the United States. Between April and August 2025, US tariffs on Indian goods rose from 10% to a steep 50%, leading to a substantial 28.5% drop in exports to the US over five months. Key sectors impacted include labour-intensive industries, smartphones, and gems.
Trade data reveals that India’s exports to the US fell from $8.83 billion in May to $6.31 billion by October 2025. Labour-intensive sectors recorded a notable 31.2% decline, translating to a loss of $1.5 billion in exports. Specifically, smartphone exports plummeted by 36%, resulting in a $790 million loss, while gem exports experienced a staggering 76% decrease.
In comparison, India faces steeper tariffs than several competitors, with China facing 30% and Japan 15%. However, India’s strategic pivot toward markets in Asia, the European Union, and the Middle East has somewhat mitigated the impact of these tariffs. Notably, shrimp exports to China surged by 60%, and gem exports to the UAE increased by 79%.
The marine sector demonstrated resilience, with exports growing by 25% in September and 11% in October 2025 despite the challenges. Orders from China increased by 60%, with Japan and Thailand seeing increases of 37% and 70%, respectively. The European Union approved 102 new Indian seafood processing units, now totaling 502, which may result in a potential 20-25% boost in exports to the EU. Shrimps accounted for $4.88 billion, or 65%, of India’s seafood exports in FY25.
While gem exports to the US fell 76% year-on-year in September, overall gem exports declined only 1.5% due to quick market diversification. The UAE, Hong Kong, and Belgium saw import increases of 79%, 11%, and 8%, respectively, helping to cushion losses in the gems and jewellery sector valued at $38 billion.
In the automotive sector, US shipments of auto components dropped by 12%, yet total auto exports rose by 8% in September 2025. Alternative markets emerged in Germany, the UAE, and Thailand. Despite these shifts, the government cautioned exporters against slashing prices in new markets to preserve competitiveness. Tariff-exempt sectors such as pharmaceuticals and petroleum also faced challenges, reporting a 25.8% decline and a loss of $881 million. Chemical exports decreased by 38%, from $537 million to $333 million.
In response to the ongoing challenges, the Indian government announced a ₹45,060 crore support package that includes ₹20,000 crore in credit guarantees. Budgets and schemes were activated to facilitate exporters in diversifying their markets. Additionally, 25 fishery units are being cleared for potential export to Russia. Nevertheless, trade officials estimate that only $2 billion of the $8 billion in annual US exports may be redirected successfully. Ongoing trade discussions with the US have yet to yield a breakthrough.
The current market realities indicate a decline in leather footwear exports by 10% due to reduced US orders, while competitors like Indonesia, with 19% tariffs, and Ecuador, with 15%, are gaining market share compared to India’s 50% tariffs. Furthermore, negotiations for a Free Trade Agreement with the EU could lead to reductions in the current 12% tariffs. In FY24, India exported $1.1 billion in seafood to the EU, with a 20-25% growth potential identified.
The International Monetary Fund (IMF) has lowered India’s GDP growth forecast for FY26 to 6.2%, accounting for the ongoing tariff impacts. This evolving trade landscape underscores the necessity of rapid diversification into emerging markets as India adapts to the effects of US tariffs on its export economy in 2025.
