US President Donald Trump’s 25% tariff on Indian exports from Aug. 1 is expected to hurt a spate of sectors — from makers of electronics and generic drugs to jewelry and auto component firms.
India’s tariffs were “among the highest in the World,” Trump said in a post on the Truth Social platform on Wednesday, with the country imposing “the most strenuous and obnoxious non-monetary Trade Barriers of any Country.” He also threatened an additional penalty due to the country’s energy purchases from Russia.
The announcement crushes New Delhi’s hopes of preferential treatment over the regional peers despite being among the first to engage Washington in trade talks, following Prime Minister Narendra Modi’s high-profile White House visit in February. Vietnam faces 20% tariffs while Indonesia has 19% and Japan 15%.
About 10% of total Indian exports would be affected in July to September if tariff exceeds 25%, Bloomberg News reported earlier citing a person familiar with India’s internal calculations. The two-way trade between India and the US stood at $129.2 billion in 2024.
The final impact on Indian businesses in any particular sector will also depend on how it compares with tariffs levied on other nations it competes with. While there’s no clarity right now on sectoral tariff rates and the penalty level, these are the industries that potentially stand to lose the most:
Gems & Jewelry
The tariff is a “deeply concerning development” that could disrupt critical supply chains and threaten thousands of livelihoods, with the gems sector in particular “severely impacted”, India’s Gem and Jewellery Export Promotion Council said in a statement late Wednesday.
The US accounts for over $10 billion worth of India’s exports from this industry and a blanket tariff will “inflate costs, delay shipments, distort pricing, and place immense pressure on every part of the value chain” from workers to large manufacturers, the trade group said.
Pharmaceuticals
India is the largest exporter of non-patented drugs to the US at an approximate annual value of $8 billion. Some of the country’s biggest companies, like Sun Pharmaceutical Industries Ltd., Dr. Reddy’s Laboratories Ltd., Cipla Ltd., receive at least 30% of their revenue from the US.
Four out of every ten prescriptions filled in the US in 2022 were supplied by Indian companies, according to IQVIA. Overall, medicines from Indian companies provided nearly $220 billion in savings to the US health care system in 2022 and a total of $1.3 trillion in the decade through 2022.
Textiles, Apparels
Home fabrics, apparel, and shoe makers in India serve the global supply chains of large US retailers, including companies such as The Gap Inc., Pepe Jeans, Walmart Inc. and Costco Wholesale Corp. India earlier sought lower tariffs than countries like Vietnam which would give a comparative advantage to this industry.
This presents a “stiff challenge” for the sector, according to a statement from the Confederation of Indian Textile Industry. “It will seriously test the resolve and resilience of India’s textile and apparel exporters as we will not enjoy a significant duty differential advantage.”
Vardhman Textiles Ltd., which supplies to several US companies, said in an earnings call this month that business from the US had been slow due to uncertainty on tariffs. Others like Welspun Living Ltd., Indo Count Industries Ltd. and Arvind Fashions Ltd. will also be at a disadvantage.
Electronics
India overtook China to become the top source of smartphones sold in the US, after Apple Inc. shifted to assemble more of its iPhones in the South Asian country. This could be under risk after the latest levy.
“Apple’s US iPhone sourcing strategy from India to circumvent China tariffs could be meaningfully set back if tariffs in India extend to 25%,” Bloomberg Intelligence analysts Anurag Rana and Andrew Girard wrote in a note July 30. “A 25% surcharge would most likely force Apple to revise this plan.”
Indian Refiners
State refiners such as Indian Oil Corp Ltd., Bharat Petroleum Corp Ltd. and Hindustan Petroleum Corp Ltd., along with private sector firms like Reliance Industries Ltd. could also lose out with the new tariffs.
India gets nearly 37% of its oil imports from Russia. Those barrels come at a discount to market rates and have been a key support for gross refining margins. If Russian crude is no longer available, the cost of imports will spike and dent refiners’ profits.
Reliance had signed a deal to buy as much as 500,000 barrels a day from Russia this year to become India’s largest buyer of Russian crude.
India’s tariffs were “among the highest in the World,” Trump said in a post on the Truth Social platform on Wednesday, with the country imposing “the most strenuous and obnoxious non-monetary Trade Barriers of any Country.” He also threatened an additional penalty due to the country’s energy purchases from Russia.
The announcement crushes New Delhi’s hopes of preferential treatment over the regional peers despite being among the first to engage Washington in trade talks, following Prime Minister Narendra Modi’s high-profile White House visit in February. Vietnam faces 20% tariffs while Indonesia has 19% and Japan 15%.
About 10% of total Indian exports would be affected in July to September if tariff exceeds 25%, Bloomberg News reported earlier citing a person familiar with India’s internal calculations. The two-way trade between India and the US stood at $129.2 billion in 2024.
The final impact on Indian businesses in any particular sector will also depend on how it compares with tariffs levied on other nations it competes with. While there’s no clarity right now on sectoral tariff rates and the penalty level, these are the industries that potentially stand to lose the most:
Gems & Jewelry
The tariff is a “deeply concerning development” that could disrupt critical supply chains and threaten thousands of livelihoods, with the gems sector in particular “severely impacted”, India’s Gem and Jewellery Export Promotion Council said in a statement late Wednesday.
The US accounts for over $10 billion worth of India’s exports from this industry and a blanket tariff will “inflate costs, delay shipments, distort pricing, and place immense pressure on every part of the value chain” from workers to large manufacturers, the trade group said.
Pharmaceuticals
India is the largest exporter of non-patented drugs to the US at an approximate annual value of $8 billion. Some of the country’s biggest companies, like Sun Pharmaceutical Industries Ltd., Dr. Reddy’s Laboratories Ltd., Cipla Ltd., receive at least 30% of their revenue from the US.
Four out of every ten prescriptions filled in the US in 2022 were supplied by Indian companies, according to IQVIA. Overall, medicines from Indian companies provided nearly $220 billion in savings to the US health care system in 2022 and a total of $1.3 trillion in the decade through 2022.
Textiles, Apparels
Home fabrics, apparel, and shoe makers in India serve the global supply chains of large US retailers, including companies such as The Gap Inc., Pepe Jeans, Walmart Inc. and Costco Wholesale Corp. India earlier sought lower tariffs than countries like Vietnam which would give a comparative advantage to this industry.
This presents a “stiff challenge” for the sector, according to a statement from the Confederation of Indian Textile Industry. “It will seriously test the resolve and resilience of India’s textile and apparel exporters as we will not enjoy a significant duty differential advantage.”
Vardhman Textiles Ltd., which supplies to several US companies, said in an earnings call this month that business from the US had been slow due to uncertainty on tariffs. Others like Welspun Living Ltd., Indo Count Industries Ltd. and Arvind Fashions Ltd. will also be at a disadvantage.
Electronics
India overtook China to become the top source of smartphones sold in the US, after Apple Inc. shifted to assemble more of its iPhones in the South Asian country. This could be under risk after the latest levy.
“Apple’s US iPhone sourcing strategy from India to circumvent China tariffs could be meaningfully set back if tariffs in India extend to 25%,” Bloomberg Intelligence analysts Anurag Rana and Andrew Girard wrote in a note July 30. “A 25% surcharge would most likely force Apple to revise this plan.”
Indian Refiners
State refiners such as Indian Oil Corp Ltd., Bharat Petroleum Corp Ltd. and Hindustan Petroleum Corp Ltd., along with private sector firms like Reliance Industries Ltd. could also lose out with the new tariffs.
India gets nearly 37% of its oil imports from Russia. Those barrels come at a discount to market rates and have been a key support for gross refining margins. If Russian crude is no longer available, the cost of imports will spike and dent refiners’ profits.
Reliance had signed a deal to buy as much as 500,000 barrels a day from Russia this year to become India’s largest buyer of Russian crude.
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