The imposition of reciprocal tariffs by the United States could affect several sectors in India, including agriculture, precious stones, chemicals, pharmaceuticals, medical devices, electrical goods, and machinery, experts have warned.
If the US proceeds with the tariff announcements scheduled for Thursday, Indian goods in these sectors may face increased customs duties due to the tariff differential—the difference between the import duties imposed by the US and India.
For example, sectors like chemicals and pharmaceuticals could experience a tariff gap of 8.6%, while textiles and clothing may face a 1.4% gap. Other products such as diamonds, gold, and jewellery may see a tariff differential of 13.3%, while sectors like machinery and computers face a 5.3% differential. The automotive sector is expected to experience a significant tariff gap of 23.1%.
According to the Global Trade Research Initiative (GTRI), agriculture will be among the hardest-hit sectors. Fish, meat, and processed seafood exports, valued at $2.58 billion, may face a 27.83% tariff differential. Shrimp, which accounts for 40% of India’s shrimp exports to the US, is expected to become less competitive due to the tariff hikes.
Other agricultural exports, such as processed foods, sugar, and cocoa, valued at $1.03 billion, may also be affected, with a tariff gap of 24.99%. Dairy products, including ghee and milk powder, may face a 38.23% differential, which could reduce their market share in the US.
In the industrial goods sector, pharmaceuticals, jewellery, and electronics may face increased tariffs. The pharmaceutical sector, which is India’s largest industrial export, valued at $12.72 billion, could see a 10.9% tariff differential, raising costs for generic medicines and specialty drugs. The jewellery sector, valued at $11.88 billion in exports, may also be impacted by a 13.32% tariff increase.
The electronics sector, which exports goods worth $14.39 billion, could face a 7.24% tariff differential, while machinery and engineering exports, valued at $7.10 billion, could see a 5.29% tariff hike.
Despite the potential impact, some experts noted that the final tariff structure may vary. There is a possibility that the US may also factor in non-tariff barriers, VAT (GST), and currency impacts when determining its reciprocal tariff policies.
The United States has been India’s largest trading partner in recent years, accounting for around 18% of India’s total goods exports. In 2023-24, India recorded a trade surplus of $35.32 billion in goods with the US. However, experts are closely monitoring the situation, as the new tariffs could affect trade dynamics between the two nations. The outcome of these tariff changes is expected to have significant implications for Indian exporters, particularly those in sectors with large trade gaps with the US.
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