New Delhi: Indian exporters are bracing for a sharp earnings decline after the United States announced a steep 50 per cent tariff on imports from India, Crisil Ratings reported. The move adds a fresh 25 per cent penalty, effective August 27, to the 25 per cent reciprocal tariff already in place.
The penalty is tied to India’s continued crude oil purchases from Russia and is expected to make Indian goods less competitive in the American market compared to most Asian rivals, except China. High-value sectors including diamonds, shrimp, home textiles, carpets, and ready-made garments are set to take the brunt of the impact.
Diamonds face particular risk, with the US accounting for a quarter of revenues in India’s diamond polishing industry. The sector, already struggling with weak demand for natural diamonds and rising popularity of lab-grown alternatives, could see profits shrink further.
Shrimp exporters are in an even more precarious position, as 48 per cent of India’s shrimp exports head to the US. The increased duties will make Indian shrimp the most heavily taxed in the US market, threatening a steep drop in sales volumes.
Home textiles and carpets, which depend on exports for 60-75 per cent of sales, are also vulnerable. The US buys 60 per cent of India’s home textile exports and half of its carpet shipments, meaning revenue and profit declines could be severe.
Ready-made garments, while less reliant on the US market, could lose competitiveness to rivals from Vietnam and China. Other sectors such as agrochemicals and capital goods may also see slower growth amid tough global competition and modest US exposure.
The US is India’s top export destination, representing 20 per cent of merchandise exports last fiscal year and contributing 2 per cent to GDP. Crisil cautioned that while strong corporate finances, possible trade pacts, and government support could cushion the blow, the tariff escalation poses a significant threat to sectors heavily dependent on US demand.
