Massive Tariff Pressures Hit Indian Exporters | US Trade Deal Relief

Money Mistakes and the Tariffs

Indian Exporters Under Pressure

Indian exporters are under pressure like never before, but the government says relief is coming. A major trade deal with the US could be just around the corner. Exporters have been told to wait a couple of months, as the government is reportedly working to finalise a bilateral trade agreement with the US by November and prepare a relief package to support the industry.

Money mistakes and the tariffs caused

Money mistakes and sudden tariffs have hit Indian exporters hard. Costly pricing errors, overreliance on a single market, and weak currency hedging left many firms exposed when steep US duties arrived — squeezing margins, shrinking orders, and forcing urgent demands for sector-specific relief and a bilateral trade deal to stabilise exports.

US Tariff Impact on India

In the meantime, relations between India and the US nosedived recently after President Donald Trump imposed a steep 50% duty on Indian exports. In a recent meeting with exporters, Commerce Minister Piyush Goyal promised a limited-scale relief package, even as the government engages with the US to reach a trade deal by fall 2025.

This timeline was announced by Trump and Prime Minister Narendra Modi in a joint declaration on February 13th, according to three executives of Export Promotion Councils and a government official. Queries emailed to the Commerce Ministry remained unanswered at press time. Exporters are facing serious tariff pressures, and sectors such as textiles, leather, pharmaceuticals, engineering goods, and gems & jewellery are among the most affected under Trump’s tariff push.

Export Figures and Sector Breakdown

India exported goods worth $87 billion to the US in FY25, accounting for 2.3% of GDP. The five sectors included:

• Engineering goods at $19.16 billion

• Electronics at $14.64 billion

• Drugs and pharmaceuticals at $10.52 billion

• Gems & jewellery at $9.94 billion

• Textiles at $10.91 billion

Together these made up $65.17 billion. India’s total merchandise exports, excluding petroleum, reached a record $374.1 billion in FY25, up 6% from $352.9 billion a year earlier.

Sectors Most Vulnerable

The US accounts for roughly 20% of India’s merchandise exports. Sectors most vulnerable to tariffs include diamond polishing, home textiles, carpets, ready-made garments, chemicals, agrochemicals, capital goods, and solar panel manufacturing, according to a Crisil Ratings report. About 25% of the revenue of Indian diamond polishers in 2024–25 came from exports to the US.

But tariffs, along with weak demand for natural diamonds there, threatened to dent revenue and compress already thin operating margins. Representatives of Export Promotion Councils and industry associations from textiles, apparel, engineering, gems & jewellery, leather, medical devices, pharmaceuticals, agriculture, and services raised sector-specific concerns at the meeting.

Government Response and Industry Concerns

The EPC members highlighted the impact of tariffs and the hardships the industry would face if these duties continue. The RoDTEP scheme refunds state and local duties and taxes to exporters. In a press statement, the Commerce Ministry said discussions focused on recent developments regarding tariff increases on certain Indian products.

Exporters emphasised the challenges posed by these barriers, their impact on competitiveness, and the need for targeted sector-specific interventions. Piyush Goyal reaffirmed the government’s commitment to safeguarding Indian exporters’ interests amidst the evolving global trade scenario. He assured industry representatives that the government is actively engaged in creating an enabling environment to help exporters navigate these recent challenges.

Conclusion

The sudden wave of steep US tariffs has exposed costly money mistakes—from overreliance on a single market to weak pricing and hedging—leaving Indian exporters with squeezed margins and fading orders. While the government’s pledge of a bilateral trade deal with the US and a targeted relief package offers a lifeline, real recovery will need swift, sector-specific support, smarter risk management, and faster market diversification. Exporters who act now — tightening pricing discipline, hedging currency risk, and exploring new markets — stand the best chance of weathering this storm and restoring growth.