India’s export-oriented industries are confronting one of the most significant challenges in recent years following the decision by the United States to impose tariffs of 50% on a wide range of Indian products. The move affects over half of India’s £65 billion worth of annual exports to the US, its largest trading partner.
The new duties have particularly serious implications for highly labour-intensive sectors such as textiles, footwear, gems, jewellery, and seafood. These industries have long been central to India’s global trade footprint, employing millions of workers and generating billions in foreign exchange. With tariffs now sharply higher, competitiveness is being eroded, creating both economic and social concerns.
Heavy Burden on Textiles and Garments
India has built a global reputation as a hub for garments, ranging from basic T-shirts to intricate embroidered apparel. In 2024, exports of textiles and garments to the US alone brought in £21 billion, driven by strong consumer demand.
The new tariff regime has altered this equation. While garments previously faced an effective duty of around 12%, the new structure has increased the rate to as much as 62%. This sudden escalation leaves Indian exporters at a significant disadvantage compared to producers in Bangladesh, Sri Lanka, Vietnam, and South Korea, who continue to benefit from lower tariff levels ranging between 15% and 20%.
For hubs like Tirupur in Tamil Nadu—home to more than half a million workers producing cotton T-shirts, tracksuits, and undergarments—such shifts represent a major challenge. Industry groups report that production lines have already started slowing down, with fears that continued tariffs could result in layoffs and factory closures.
Gems, Jewellery, and Seafood Under Pressure
India’s gems and jewellery industry, which exports nearly $10 billion annually to the US, faces an equally steep challenge. The Gem and Jewellery Export Promotion Council has warned that tariffs of this magnitude could reduce exports by more than 75%, impacting diamonds, coloured gemstones, and finished jewellery.
Chairperson Kirit Bhansali described the effect as “a blanket tariff that will inflate costs, delay shipments, distort pricing, and create immense pressure on the value chain.” For a sector that employs millions directly and indirectly across Surat, Jaipur, and Mumbai, the stakes are particularly high.
The seafood industry, another major pillar of India’s exports, is also grappling with higher duties. Shrimp exports—worth £5.5 billion annually—now face an effective duty of around 60%, up from previous levels that allowed India to remain competitive. With two-thirds of Indian shrimp exports destined for the US market, producers now face intensified competition from Ecuador and other low-tariff suppliers.
Economic Fallout and Social Impact
Beyond immediate concerns for exporters, the wider economic effects of the tariffs are becoming clear. Economists estimate that the additional duties could shave up to one percentage point off India’s GDP this year. While India’s economy grew by 7.8% in the first quarter of 2025, the long-term impact of sustained tariff barriers could dampen export revenues, private consumption, and job creation.
The ripple effects extend far beyond factories. Lower exports mean reduced wages, fewer orders for ancillary services, and lower sales for small vendors who depend on workers’ earnings. In Tirupur, for instance, smaller food vendors and transport providers are already reporting a decline in demand.
Shrimp farming, which sustains over 16 million people across India, highlights the broader stakes. Farmers and suppliers alike are warning that price-sensitive buyers may shift to other countries if tariffs persist, leaving entire communities vulnerable.
Industry Response and Government Action
Industry leaders are urging both immediate relief and long-term strategies to mitigate the impact. The Federation of Indian Export Organisations (FIEO) has called for credit assistance, export subsidies, and stronger promotion of Indian goods in alternative markets. Some companies, such as large apparel exporters, may be able to reallocate orders to overseas facilities, but smaller firms are likely to bear the brunt of the pressure.
The Indian government is reportedly exploring diversification strategies, with trade officials discussing opportunities in markets such as Japan, South Korea, and Southeast Asia. Efforts are also underway to expand the country’s textile export drive to more than 40 countries.
As SC Ralhan, president of FIEO, emphasized: “The steps taken now will determine how effectively India withstands external shocks. Relief measures and market diversification are critical in protecting jobs and stabilizing industries.”
Long-Term Outlook
While the immediate concern is tariff-related disruptions, industry experts caution that the longer-term impact could involve structural shifts in supply chains. Once buyers adjust sourcing strategies and relocate orders to alternative markets, regaining lost ground may be difficult. The competitive advantage India once held in textiles, jewellery, and seafood could take years to rebuild if export volumes fall sharply.
The tariffs also present a test for India’s broader economic goals. Prime Minister Narendra Modi’s “Make in India” initiative has placed manufacturing at the center of job creation, aiming to absorb the millions of young people who enter the workforce each year. Higher trade barriers risk undermining these ambitions by threatening precisely the industries most capable of generating large-scale employment.
For now, exporters are pushing shipments where possible, seeking to cushion the blow and maintain relationships with US buyers. But unless duties are reduced or alternative markets quickly absorb displaced goods, the risk of job losses and supply chain disruption will remain high.
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