India’s exports to the US have taken a significant hit for the third month in a row. In August, shipments fell by 16.3%, dropping to $6.7 billion. The culprits are rising tariffs that have shot up to 50%. This situation is stressing Indian exporters who are struggling against these growing trade barriers.
Despite this decline, the Investment Information and Credit Rating Agency (ICRA) has updated India’s GDP growth forecast for FY26. They’ve lifted it to 6.5% from 6%, suggesting that some government measures, like GST rationalization, may help cushion the blow. However, exporters need quick assistance to adapt and explore new markets.
According to a recent report by the Global Trade Research Initiative (GTRI), the drop in exports illustrates the uneven effects of the tariff hikes. About one-third of India’s exports to the US, including pharmaceuticals and smartphones, are exempt from these tariffs. This shows that sectors relying heavily on the US market, like apparel and seafood, may feel the pain more acutely. In fact, these industries often depend on the US for up to 60% of their global sales.
If the current tariffs remain in place through FY26, India could lose between $30 billion and $35 billion in U.S. exports—an alarming figure, as the US is crucial, accounting for 20% of India’s total goods exports.
GTRI’s founder, Ajay Srivastava, mentioned that industry groups are urging the Indian government for immediate relief. Suggestions include interest rate subsidies and faster duty refunds. So far, while the government has reduced GST rates to stimulate domestic consumption, targeted measures for exporters are lacking. If relief does not arrive soon, job losses could follow, further impacting India’s trade outlook as we approach 2026.
The new tariffs have made India one of the nations facing the highest duties globally, damaging its competitiveness. After the US set a 25% tariff on Indian imports starting August 7, 2025, an additional 25% was added on August 27, totaling 50%. This is noticeably tougher than tariffs imposed on competitors like China and Vietnam.
According to ICRA’s report, over 140 product categories from India are impacted by these tariffs. This includes auto parts, metals, textiles, and seafood, among others. While some sectors are finding ways to adapt, many are bracing for tighter margins and potential declines in demand.
Sectoral Impact Overview
Auto Components: They heavily rely on exports, with the US being a key market. While some companies are diversifying to mitigate the effects, they’re still at a disadvantage compared to rivals facing lower tariffs.
Metals: This sector hasn’t seen major disruptions yet, as companies have managed to pass increased costs onto customers. However, global market shifts could soon threaten profit margins.
Chemicals: With a significant share of exports going to the US, the rising tariffs are introducing profitability risks, but some companies are exploring new markets.
Textiles: Approximately one-third of Indian apparel exports go to the US. The recent tariff hikes mean that Indian companies are now less competitive than peers in countries like Vietnam.
Seafood: A large portion of India’s seafood exports goes to the US, but competitors facing lower tariffs could easily seize market share.
Despite these challenges, experts remain cautiously optimistic. ICRA’s revised GDP growth forecast reflects a belief that India’s economy could adapt over time, aided by administrative support and strategic industry moves.
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US TARIFF, US EXPORTS, GDP, INDIAN ECONOMY, INDIA US RELATIONS, EXPORTS TO US PLUNGE 16 PERCENT TARIFFS ICRA UPS FY26 GDP FORECAST TO 6 PERCENT ON GST REFORM HOPES
