Indian exporters are urgently exploring options to mitigate the potential fallout from US President Donald Trump’s threatened tariff hike. Many fear significant job losses after Trump stated he would raise new import tariffs from 25% to 50% if India continues to purchase Russian oil, a move intended to cut off Moscow’s revenue for its military actions in Ukraine.
Economist Garima Kapoor of Elara Securities warned that “at 50% tariff, no product from India can stand any competitive edge.” India, a major crude oil importer, has until August 27 to find alternatives to replace about a third of its current foreign oil supply. While not a major export powerhouse, India shipped approximately $87 billion worth of goods to the US in 2024.
This new 50% levy threatens to disrupt low-margin, labor-intensive sectors such as gems and jewelry, textiles, and seafood. The Global Trade Research Initiative projects a potential 60% decline in US sales for sectors like garments in 2025.
Exporters are currently rushing to fulfill orders before the deadline. Vijay Kumar Agarwal, chairman of the Creative Group, a textile and garment exporter in Mumbai, said, “Whatever we can ship before August 27, we are shipping.” However, he called this a temporary fix that “doesn’t solve the problem” and expressed concern for the future of his 15,000 to 16,000 employees, calling the situation “very gloomy.”
Businesses are already feeling the impact, with fresh orders from some US buyers starting to dry up. This threatens millions of dollars in future business and the livelihoods of hundreds of thousands of people. Some of India’s largest apparel makers with global operations are considering shifting their US orders elsewhere. Pearl Global Industries has reportedly been asked by some US clients to produce orders in countries with lower tariffs, such as Vietnam or Bangladesh, where it has manufacturing facilities. Another major apparel company, Gokaldas Exports, is considering increasing production in Ethiopia and Kenya, where tariffs are just 10%.
Moody’s recently warned that the “much wider tariff gap” for India could “even reverse some of the gains made in recent years in attracting related investments.” The gems and jewelry industry, which exported over $10 billion worth of goods last year, is particularly vulnerable. Ajesh Mehta from D Navinchandra Exports stated, “Nothing is happening now, everything is at a standstill, new orders have been put on hold.” He estimates that “up to 150,000 to 200,000 workers” could be affected. Seafood exporters, who have been told by some US buyers to hold shipments, are also actively looking for new markets like China, Japan, and Russia, but they acknowledge that creating new markets is not a simple or quick process.
