Blitz Bureau
NEW DELHI: India’s merchandise exports to the US, its largest market, have gone down by 22.2 per cent between May and August 2025, dropping from $8.8 billion to $6.9 billion, as the steep escalation of American tariffs weighs on shipments, according to a new report by the Global Trade Research Initiative (GTRI).
The tariff blow has been sharp and uneven. The US raised import duties on Indian goods from 10 per cent in early August to 25 per cent by mid-month and a punishing 50 per cent by month-end.
September will be the first full month with the higher levy, which could deepen the slide in labour-intensive sectors such as textiles, gems and jewellery, shrimp, chemicals, and solar panels, cautioned GTRI.
“Tariff-exempt exports collapse is a puzzle. It is alarming and counterintuitive — these products face zero US tariffs, yet they have seen the steepest decline. This demands urgent investigation to uncover the real reasons that are driving the fall,” stated the report.
The steepest decline came in tariff-free items. Exports of smartphones, pharmaceuticals, and petroleum products, which face zero duties in the US, fell 41.9 per cent to $1.96 billion.
Smartphone exports collapsed 58 per cent to $965 million, down from $2.3 billion in May. Foxconn and Tata Electronics, the two largest exporters, may be shifting their production base to Vietnam or China for newer models. Pharmaceutical exports shrank 13.3 per cent to $647 million, raising fresh concerns for India’s $25 billion drug sector.
In contrast, products under uniform global tariffs, including metals and auto components, slipped just 4 per cent to $600 million, cushioned by the fact that India is not uniquely disadvantaged.
The sharper stress is visible in category C goods — those singled out for the 50 per cent tariff. Shipments fell 10.8 per cent to $4.3 billion. Gems and jewellery exports contracted 9.1 per cent, with Surat’s diamond industry hit hard, though lab-grown diamonds surged over 40 per cent, reflecting shifting US consumer preferences.
Solar panel exports dropped 34.6 per cent, raising fears of losing share to China and Vietnam, both facing lower tariffs. Seafood exports collapsed 43.8 per cent, with Vannamei shrimp plunging 52.2 per cent, threatening livelihoods across coastal clusters.
Textile and garment exports fell 9.3 per cent to $855 million, with cotton dresses down a staggering 66.7 per cent. Home textiles were the only bright spot, rising 14.2 per cent on steady US demand. Chemicals, agrochemicals in particular, slumped nearly 27 per cent, while agro and processed food shipments also weakened sharply.
GTRI cautioned that the fall in tariff-exempt exports is “alarming and counterintuitive”, demanding urgent investigation. Industry bodies are urging the Government to extend interest equalisation subsidies, speed up duty remission, and provide liquidity support. While GST cuts have been rolled out to boost domestic demand, export-specific relief is still awaited.