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.

Only 44% of rural India willing to pay for COVID-19 vaccine doses

As the country waits anxiously for the official launch of the coronavirus vaccine including those from Indian pharmaceutical companies, a survey of Rural India by Gaon Connection (GC) reveals that 44% of the respondent households were willing to pay for the vaccine. While 36% said they wouldn’t and 20% said they were not sure.

Of those willing to pay for the vaccine in rural India, two-third were open to shelling out less than Rs 500 for two doses and just 8% were comfortable paying Rs 1,000 more. Also, over than 33% respondents said their elderly parents would be the first to get vaccinated.

The findings are a part GC’s third rural survey titled the ‘COVID-19 Vaccine and Rural India’. Conducted across 60 districts in 16 states and one union territory, the face-to-face rapid survey comprised a sample size of 6,040 households and was conducted between December 1 and December 10, 2020.

The survey also asked rural citizens if the government had to prioritise vaccination, who should be given the top priority to which 43.5% respondents said it should be the doctors and nurses.

The GC survey also showed that over 51% respondents believe the COVID-19 disease was a “conspiracy by China”, 22% said it was due to failure of people to take precautions and 18% felt the government failed to contain the spread.

While jobs and incomes were impacted, half of the survey respondents said spend on buying / consuming packaged immunity boosting products viz. Chyawanprash, Giloy, Kaadah, Vitamin tablets, etc. has increased during the pandemic. That’s not all, the coronavirus outbreak altered the food habits of rural citizens. Almost 70% stopped eating outside food, over 33% were consuming more vegetables and 30% were having more fruits in their daily diet.

Around one-fourth of the total respondent households reported that samples from at least one member of their household was taken for the testing of COVID-19. The proportion of such households was the highest (42.6%) in the east-and-northeast zone, whereas it was the lowest in the north zone (10.9%).

Of the 25.9% respondent households who reported their family member(s) getting tested for COVID-19, more than half, that is 59%, said at least one person in their household had tested positive for the coronavirus. Overall, 15% of the total 6,040 respondent households reported at least one person in their household/friend circle testing positive for COVID 19.

Overall, some 15% rural households reported at least one person in their household / friend circle testing positive for COVID 19.

Those keen for more details on the survey can download the full report published under the title ‘The Rural Report 3: COVID-19 Vaccine and Rural India’ from www.ruraldata.in.

(The writer is a Mumbai-based independent business journalist and has extensively covered diversified consumer businesses over the last two decades. He can be reached at hello@ashishktiwari.com)

Dr Reddy's, Fujifilm call off alliance

This story first appeared in DNA Money edition on Tuesday, Jun 4, 2013.

Dr Reddy’s and Fujifilm have called off their partnership to tap the generic drugs market in Japan after almost two years of planning and market analysis.

The companies had in July 2011 inked a memorandum of understanding (MoU) with plans to seta joint venture for developing and manufacturing drugs in Japan and had even conducted studies on business aspects.

“However, as Fujifilm realigns its long-term growth strategy for the pharmaceutical business, both companies have led to a mutual agreement to terminate the MoU,” the companies said in a joint statement on Monday.

GV Prasad, chairman and CEO, Dr Reddy’s Laboratories, called it an unfortunate development. “However, I want to reinforce our commitment towards a planned entry into Japan to bring affordable and innovative drugs to more patients worldwide,” he said.

The companies will continue to explore partnerships in other pharmaceutical businesses, the statement said.

“In the long-term we will be focusing more on priority fields such as new drugs in cancer, more value-added super generic,” said Takatoshi Ishikawa, director corporate vice-president and general manager of pharma products division, Fujifilm.

Analysts made light of the development. “We haven’t changed our estimates on Dr Reddy’s given the JV does not contribute anything,” said Sarabjit Kour Nangra, VP-Research, Pharma, Angel Broking.