Tariffs batter India's exports to US; GTRI suggests rolling out Export Promotion Mission

The decline in exports followed a rapid escalation in US duties that began at 10 per cent on April 2, rose to 25 per cent on August 7, and reached 50 per cent by late August.

The spike in tariffs made Indian goods among the most heavily taxed of any US trading partner, according to a GTRI report Saturday.

For comparison, China faced tariffs of about 30 per cent, while Japan at 15 per cent.

India's exports to the US during the period has been divided into three tariff regimes in the GTRI report -- Tariff-exempt items such as smartphones, pharmaceuticals and petroleum products accounted for 40.3 per cent of October exports but still fell 25.8 per cent, from USD 3.42 billion in May to USD 2.54 billion in October--a contraction of USD 881 million.

Products facing uniform global tariffs--mainly iron, steel, aluminum, copper and auto parts--formed just 7.6 per cent of shipments in October. Exports in this category fell 23.8 per cent, sliding from USD 629 million in May to USD 480 million in October, or about USD 149 million, data maintained by GTRI showed.

The steepest decline in exports occurred in labour intensive products where India alone faced 50 per cent tariffs. Gems and jewellery, solar panel, textiles and garment, chemicals, seafoods,

These goods, which represented 52.1 per cent of October exports, collapsed 31.2 per cent, falling from USD 4.78 billion to USD 3.29 billion--nearly USD 1.5 billion erased in just five months, GTRI has asserted.

Even tariff-free products felt the shock.

Smartphones, India's single biggest product line to the US, suffered a 36 per cent decline, sliding from USD 2.29 billion in May to USD 1.50 billion in October--a loss of almost USD 790 million.

Monthly exports fell consistently from USD 2.0 billion in June to USD 1.52 billion in July, crashed to USD 964.8 million in August, eased further to USD 884.6 million in September, and finally recovered to USD 1.5 billion in October, GTRI said, without giving any rationale.

Pharmaceutical exports dipped only 1.6 per cent, while petroleum product shipments declined 15.5 per cent.

In the metals (US Tariffs of 50 per cent) and auto parts (US Tariffs of 25 per cent) category, the export drop reflects weakening US industrial demand rather than loss of competitiveness, as tariff treatment was equal across suppliers, GTRI opined.

Against that stark backdrop, GTRI urges the government to roll out the Export Promotion Mission and press Washington to drop the Russia-related additional tariff of 25 per cent imposed on Indian goods.

"First, the Export Promotion Mission--announced in March and approved by the Cabinet on Nov. 12--still exists only on paper. Nearly eight months into the fiscal year, no schemes are operational, while long running programs such as the Market Access Initiative and the Interest Equalisation Scheme have made no payments this year," GTRI noted.

With annual funding capped below Rs 4,200 crore, GTRI believes that the Mission will miss its goals unless the government quickly issues guidelines, restores regular disbursals and gives exporters clear eligibility rules and timelines.

The Union Cabinet chaired by Prime Minister, Narendra Modi earlier this month has approved the Export Promotion Mission (EPM) -- a flagship initiative announced in the Union Budget 2025-26 to strengthen India's export competitiveness, particularly for MSMEs, first-time exporters, and labour-intensive sectors.

The Mission will provide a comprehensive, flexible, and digitally driven framework for export promotion, with a total outlay of Rs.25,060 crore for 2025-26 to 2030-31.

Besides, GTRI argued that removing 25 per cent additional tariffs would halve the effective US tariff burden on Indian goods to 25 per cent, offering relief to labour-intensive sectors. GTRI urged the Government to make these two steps central to restoring part export competitiveness and resetting talks with the US on a "more even footing". (ANI)