India’s exports to US slump under steep tariff hikes, $3.3 billion wiped out May–Sept 2025

Mumbai: India’s exports to the United States have experienced a significant downturn, marking one of the sharpest short-term declines in recent years. Between May and September 2025, exports to the US fell by 37.5 per cent, dropping from $8.8 billion to $5.5 billion. This decline comes in the wake of steep tariff hikes imposed by the US government, which began at 10 per cent on April 02, 2025, escalated to 25 per cent on August 07, 2025, and reached a punitive 50 per cent by late August 2025. The Global Trade Research Initiative (GTRI) has analysed the impact of these tariffs, revealing a widespread contraction across various sectors.

Surprisingly, tariff-free products, which account for nearly one-third of India’s total shipments to the US, suffered the most severe contraction. Exports in this category fell by 47 per cent, from $3.4 billion in May to $1.8 billion in September. Among the hardest-hit products were smartphones and pharmaceuticals, both of which are key beneficiaries of India’s Production Linked Incentive (PLI) manufacturing programme. 

Smartphone exports, which had seen a remarkable 197 per cent surge between April and September 2024 compared to the same period in 2025, plummeted by 58 per cent during the review period. Monthly shipments fell consistently, from $2.29 billion in May to $884.6 million in September. The reasons behind this sharp decline remain unclear and warrant further investigation. Pharmaceutical exports also experienced a notable drop, slipping by 15.7 per cent from $745.6 million to $628.3 million, despite being exempt from tariffs.

In contrast, sectors subject to uniform tariffs for all countries, such as industrial metals and auto parts, showed a milder decline. Exports in these categories fell by 16.7 per cent, from $0.6 billion to $0.5 billion. Within this group, aluminium exports dropped by 37 per cent, copper by 25 per cent, auto parts by 12 per cent, and iron and steel by 8 per cent. The relatively smaller contraction in these sectors suggests that the decline may be more closely linked to a slowdown in US industrial activity rather than a loss of competitiveness for Indian exporters.

The most severe impact was felt in labour-intensive sectors, which were subjected to the 50 per cent India-specific tariffs. These sectors, including textiles, gems and jewellery, chemicals, agri-foods, and machinery, collectively account for nearly 60 per cent of India’s exports to the US. Exports in these categories fell by 33 per cent, from $4.8 billion in May to $3.2 billion in September. 

Within this group, gems and jewellery exports were particularly hard-hit, collapsing by 59.5 per cent from $500.2 million to $202.8 million. Gold jewellery exports fell by 58 per cent, diamond-studded pieces by 63 per cent, and lab-grown jewellery by 37 per cent. Exports of cut and polished diamonds dropped by 54 per cent, while lab-grown diamond exports plunged by a staggering 89 per cent. The decline has severely impacted manufacturing hubs in Surat and Mumbai, as competitors from Thailand and Vietnam have captured lost US orders.

Solar panel exports also suffered a sharp decline, falling by 60.8 per cent from $202.6 million to $79.4 million. India’s competitiveness in the renewable energy sector has been eroded, particularly as China and Vietnam face lower tariffs of 30 per cent and 20 per cent, respectively. Textiles and garments, another key labour-intensive sector, saw exports fall by 37 per cent, from $944 million to $597 million. Within this category, garments experienced a 44 per cent decline, home textiles fell by 16 per cent, and yarn and fabrics dropped by 41 per cent. Knitted apparel exports decreased by 39 per cent, woven apparel by 50 per cent, and girls’ suits by 66 per cent.

Chemical exports also faced a significant downturn, shrinking by 35 per cent from $537 million to $350 million. Agrochemicals fell by 37 per cent, while essential oils dropped by 44 per cent. This decline has adversely affected production hubs in Vapi, Dahej, Ankleshwar, and Vizag, which are home to major firms such as UPL and Rallis India, as well as numerous micro, small, and medium enterprises (MSMEs) in Maharashtra and Karnataka.

Marine and seafood exports, another labour-intensive sector, declined by 49 per cent, from $223 million to $113 million. Vannamei shrimp exports fell by 51 per cent, while processed seafood dropped by 22 per cent. Coastal hubs such as Nellore, Bhimavaram, Kakinada, Paradeep, Veraval, and Porbandar have been severely impacted, as buyers have shifted their focus to competitors in Ecuador and Vietnam.

Agricultural and processed food exports also recorded a broad-based slump. Preparations of cereals fell by 27 per cent, processed fruits and vegetables by 44 per cent, roots and tubers by 45 per cent, cocoa products by 99 per cent, oilseeds by 53 per cent, dairy and honey by 59 per cent, processed foods by 35 per cent, coffee and spices by 40 per cent, and resins by 61 per cent. These losses have had a devastating impact on agricultural clusters in regions such as Nashik, Gujarat, Kerala, Karnataka, Jharkhand, and Chhattisgarh, erasing two years of steady growth.

The sharp decline in exports has prompted calls for urgent government intervention. Exporters are urging authorities to implement targeted relief measures to mitigate the impact of the tariffs. Proposed actions include enhanced interest-equalisation support to reduce financing costs, faster duty remission to alleviate liquidity pressures, and emergency credit lines for MSME exporters. Without swift and decisive action, India risks losing its market share to competitors such as Vietnam, Mexico, and China, even in sectors where it has traditionally held a strong position.

The data presented in the GTRI report underscores the significant impact of the US tariffs on India’s export performance. The tariffs have not only squeezed trade margins but have also exposed structural vulnerabilities across key industries. As the situation continues to unfold, it remains imperative for policymakers to address these challenges and support exporters in navigating the difficult terrain ahead.

₹25,060 crore export promotion mission to strengthen exports and support MSMEs

Mumbai: The Union Cabinet has approved the Export Promotion Mission (EPM), a new framework designed to consolidate and strengthen India’s export ecosystem. With an outlay of ₹25,060 crore for the period from FY2025–26 to FY2030–31, the initiative is expected to provide targeted support to vulnerable sectors, particularly micro, small and medium enterprises (MSMEs), first-time exporters and labour-intensive industries. The move represents a shift away from fragmented schemes towards a single, outcome-based mechanism that can respond more effectively to global trade challenges.

Exports remain a cornerstone of India’s economy, contributing significantly to foreign exchange earnings and employment. MSMEs alone account for nearly half of India’s total exports, yet they often face structural barriers such as limited access to affordable trade finance, high compliance costs and inadequate branding in international markets. The EPM seeks to address these issues through two integrated sub-schemes, Niryat Protsahan and Niryat Disha, which together combine financial and non-financial support for exporters.

Niryat Protsahan focuses on improving access to affordable trade finance. It includes measures such as interest subvention, export factoring, collateral guarantees and credit cards for e-commerce exporters. These instruments are designed to ease liquidity constraints and enable businesses to diversify into new markets. For MSMEs, which frequently struggle to secure credit on reasonable terms, the scheme provides a structured mechanism to reduce risk for lenders while ensuring that smaller firms are not excluded from global trade opportunities.

Niryat Disha complements this by offering non-financial enablers that enhance market readiness and competitiveness. Support will be provided for compliance with international standards, branding and packaging, participation in trade fairs, warehousing and logistics, and inland transport reimbursements. The scheme also includes trade intelligence and capacity-building initiatives, which are intended to help exporters understand and adapt to shifting global demand. Together, the two sub-schemes create a comprehensive framework that addresses both the financial and operational challenges faced by Indian exporters.

Priority support will be extended to sectors that have been affected by recent global tariff escalations, including textiles, leather, gems and jewellery, engineering goods and marine products. These industries are not only significant contributors to India’s export earnings but also major sources of employment, particularly in regions with high concentrations of labour-intensive production. By providing targeted interventions, the EPM aims to sustain export orders, protect jobs and encourage diversification into new geographies. This is especially important at a time when global trade is facing headwinds from slowing demand and rising protectionism.

The Directorate General of Foreign Trade (DGFT) will act as the implementing agency, with all processes managed through a dedicated digital platform integrated with existing trade systems. This is expected to streamline applications and disbursals, reduce administrative delays and make the system more transparent. The collaborative framework involves the Department of Commerce, the Ministry of MSME, the Ministry of Finance, financial institutions, export promotion councils, commodity boards, industry associations and state governments, ensuring that the mission is anchored in broad-based participation.

The consolidation of existing schemes such as the Interest Equalisation Scheme (IES) and the Market Access Initiative (MAI) into the EPM reflects an effort to align support mechanisms with contemporary trade needs. By bringing these under a single umbrella, the government aims to reduce duplication, improve efficiency and create a more adaptive system that can respond quickly to changing global conditions. For exporters, particularly those entering international markets for the first time, this offers a clearer and more accessible pathway to support.

The expected impact of the mission extends beyond immediate financial relief. By facilitating access to affordable trade finance, enhancing compliance and certification support, and improving market visibility, the EPM is designed to boost exports from non-traditional districts and sectors. This could help broaden the base of India’s export economy, reduce dependence on a limited set of products and markets, and generate employment across manufacturing, logistics and allied services. The emphasis on inclusivity and technology-enabled processes also reflects a longer-term vision of making India’s export framework more resilient and globally competitive.

For MSMEs, the mission represents a significant opportunity. These enterprises often operate with limited resources and face disproportionate challenges in meeting international standards and accessing global markets. The combination of financial instruments under Niryat Protsahan and operational support under Niryat Disha provides a balanced approach that addresses both immediate liquidity needs and longer-term competitiveness. First-time exporters, who may lack experience in navigating complex trade requirements, stand to benefit from the structured support offered through compliance assistance, branding initiatives and trade intelligence.

Labour-intensive sectors are also expected to gain from the mission. Industries such as textiles and leather employ millions of workers, many of whom are based in rural and semi-urban areas. By sustaining export orders and supporting diversification, the EPM could help protect livelihoods and ensure that these sectors remain viable in the face of global competition. The focus on vulnerable sectors highlights the mission’s role not only in boosting exports but also in safeguarding employment and promoting inclusive growth.

To make this scheme effective, strong execution will be crucial, together with exporters’ capacity to channel the additional liquidity into market expansion and improved competitiveness. If implemented efficiently, the Export Promotion Mission can play a decisive role in sustaining India’s export growth while safeguarding millions of jobs across vulnerable and labour-intensive sectors. The initiative represents a forward-looking step to align the country’s export framework with the broader vision of Viksit Bharat @2047.

Titan cuts H2 FY’20 growth guidance to 11-13% from over 20% earlier

A version of this story first appeared in The Free Press Journal on Wednesday, November 6, 2019.

Stressed consumer sentiments coupled with growing tendency for conserving cash in hand is likely to impact growth targets for consumer companies in the remaining quarters of the current fiscal. And as demand environment continues to be sluggish, consumer companies could be looking to revise their growth guidance for the second half (H2) of fiscal 2019-20 (FY’20).

Taking a lead in this direction is Tata Group’s jewellery, watches, eyewear and fashion accessories business vertical, Titan Company Ltd (TCL). The company management said in an earnings call on Tuesday evening that it has revised jewellery business growth guidance for the period between October 2019 to March 2020. Taking a cautious approach Titan Co. management had in August 2019, said that it was targeting over 20% revenue growth keeping the wedding and festive season in mind.

C K Venkataraman, managing director, Titan, said, “The guidance has been revised to between 11% and 13% now from the earlier over 20% growth levels.” The downward revision has been done after taking into account that overall market situation and consumer buying behaviour, said the top company executive.

Analysts tracking Titan are of the view that the premise of over 20% growth talked about earlier was based on company’s execution of business and not necessarily relying on overall macro market conditions. However, the change in the guidance now is an indication of concerns in this industry as a result of which Titan management has made a significant correction in its growth numbers going forward.

Abneesh Roy, executive vice president - institutional equities (research), Edelweiss Securities, said that the brokerage has been pointing that achieving 20% guidance in H2FY20 is very difficult in jewellery business given weak sentiments, high base of 36% in Q3FY20 and 21% in Q4FY20. “For FY21, the company is yet to change guidance from current 20%. By next quarter, Titan said they will have more clarity,” said Roy.

 
While Edelweiss expects Titan to correct 5-6% in near term, from longer term perspective, the brokerage maintains a BUY on dips given huge retail expansion, struggling competitors and increasing formalisation of jewellery sector.

Elucidating the reasons that led to revising the guidance, Venkataraman said, the company had set out a growth table for five years based on positive sentiments in the business environment. Growth may have been sluggish, in single-digits or flat during the fiscals 2018 and 2019 owing to certain migration that started happening as a result of a lot of structural changes, demonetisation, Nirav Modi scam and so on.

”The trust factor started kicking in, in favour of Tanishq and we were able to deliver a 20% plus growth rate with a certain set of initiatives and certain level of excellence in our execution. Our internal research with consumers done earlier in January and February 2019, indicated positive sentiments. However, what’s appearing now after six - seven months, is that the sentiment is actually worse than what we had measured then.

“As a result, the overall industry has witnessed 70% decline in imports, every single jeweller that we are aware of, is talking about a decline, vendors are talking about big drop in supplies. Regional jewellers are talking about a 12% and 22% decline in business during the festive period as opposed to 10% positive growth that has been achieved by Tanishq. So, obviously the strategies and standards of excellence in our execution are happening in a circumstance that’s less in our favour than a year ago,” he said.

Taking into account the market conditions, the company had to go back to the drawing board, expand the number of weapons that required (to deal the market conditions) or create fresh ones. That, as per Venkataraman, will take a little more than a few months and hence the change in guidance for October 2019 to March 2020 period.

“It is our intent to keep gunning for the over 20% growth number for fiscal 2021. For the moment though, it can only be about tweaking of the arsenal that we already have. And we are going by the more recent growth performance over the last three to four months,” he said.

While companies like Hindustan Unilever Ltd (HUL) operating in the fast moving consumer goods (FMCG) sector are optimistic about overall business, the company management had earlier said that near-term demand outlook, especially in the rural markets, remains challenging.

Among India's leading Ayurvedic and natural health care companies, Dabur said that it is working on achieving its annual growth target of mid to high single digits for the full year.

On the possibilities of revising the guidance for the second half of current fiscal, Mohit Malhotra, chief executive officer, Dabur Ltd, said, there was no need to do it. “We will work to achieve the targeted growth rates for the fiscal 2020,” he said in the earnings call on Tuesday.

(The writer is an independent business journalist and can be reached at ashishktiwari.1976@gmail.com)