India’s 70% Goods Export Exposed to Trump Tariffs: ICRIER Calls for Negotiation & Diversification

Extent of Tariff Exposure

According to a new report by the Indian Council for Research on International Economic Relations (ICRIER) titled “Navigating Trump’s Tariff Blow”, nearly 70% of India’s goods exports to the US, valued at USD 60.85 billion, now face the 50% tariff imposed by the US administration.
While this figure may sound alarming, it constitutes only 1.56% of India’s GDP and 7.38% of total exports, making it a manageable—though sectorally concentrated—challenge for India’s USD 3.9 trillion economy.

Key Sectors Affected

The impact of the tariffs is highly sector-specific, with serious consequences for labour-intensive and high-value export industries:

  • Textiles & Apparel: Facing over a 30 percentage point tariff disadvantage compared to competitors such as Bangladesh, Pakistan, and Vietnam. This threatens India’s long-standing competitive edge in one of its largest export markets.

  • Gems & Jewellery: Exports worth USD 11.9 billion will now struggle against global suppliers like Turkey, Vietnam, and Thailand.

  • Auto Parts: Constituting 3% of India’s exports to the US, this sector faces reduced competitiveness and could lose market share.

  • Agriculture (Shrimp Exports): Among the worst hit, with tariffs significantly higher than those applied to competitors like Ecuador, Indonesia, and Vietnam. India’s shrimp trade was already dealing with anti-dumping and countervailing duties, and the new tariffs add another layer of difficulty.

The report emphasised that these are sectors where buyers can switch suppliers quickly, putting US importers in a stronger bargaining position and weakening India’s negotiating leverage.

ICRIER’s Strategic Recommendations

The report’s authors — Ashok Gulati, Sulakshana Rao, and Tanay Suntwal — outlined a three-pronged response strategy for India:

  1. Smart Negotiations: Engage the US with logic and rationality to reduce tariff impact.

  2. Targeted Relief: Provide immediate policy and financial support to sectors hit hardest by tariffs.

  3. Export Diversification: Reduce overdependence on the US by exploring and expanding into alternative markets.

According to ICRIER, long-term success will be defined by India’s ability to turn short-term trade shocks into strategic opportunities, reinforcing its role as a trusted global economic partner.

The Trump Administration’s Tariff Policy

US President Donald Trump initially announced 25% tariffs on Indian goods, despite ongoing talks for an interim trade deal. Days later, he imposed an additional 25% tariff, bringing the total to 50%, citing India’s continued imports of Russian oil.

The Trump administration excluded certain sectors from the tariffs, such as:

  • Pharmaceuticals

  • Energy products

  • Critical minerals

  • Semiconductors

However, India remains disadvantaged compared to regional competitors. Vietnam faces only 20% tariffs, Bangladesh 18%, Indonesia and Malaysia 19%, and Japan and South Korea just 15%.

India’s Response to Tariffs

  • Government Position: Commerce and Industry Minister Piyush Goyal, during the Monsoon Session of Parliament, confirmed that the government is assessing the tariff impact and will take all steps necessary to safeguard national interest.

  • Russian Oil Issue: The Ministry of External Affairs (MEA) reiterated that India’s oil imports are based on market needs and are crucial to ensuring predictable and affordable energy for 1.4 billion people.

  • Official Stand: MEA called the US move “unfair, unjustified, and unreasonable”, stressing that India will protect its economic security and national interests.

India-US Trade Negotiations

Despite tensions, India and the US are pursuing talks for a Bilateral Trade Agreement (BTA), launched in March 2025. The first stage of the agreement is expected by October-November 2025.
However, negotiations face challenges, particularly over the US demand to open India’s agricultural and dairy markets. For India, these sectors are politically and socially sensitive, as they provide livelihoods to millions of workers and farmers.

Conclusion

While Trump’s tariffs expose India’s vulnerability in specific export sectors, the broader economic impact remains contained. The challenge lies not in GDP-level shocks but in sectoral disruptions affecting jobs and livelihoods.

India now faces a decisive moment: whether to negotiate tariff rollbacks, provide domestic relief, or fast-track export diversification. How New Delhi navigates this situation will determine whether the current setback becomes a strategic inflection point in India’s trade policy.


Location: Pune, Maharashtra, India

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