By Kavita Mistry 
India’s labour-intensive sectors are staring at a possible 70% collapse in exports following the U.S. decision to impose steep tariffs from August 27. According to a Global Trade Research Initiative (GTRI) report, duties of 50% or more will impact USD 60.2 billion worth of Indian exports, striking at the heart of industries that employ millions.
Key Sectors at Risk
The new tariff regime will severely hit sectors like textiles, gems and jewellery, shrimp, carpets, handicrafts, agrifood, and light metals. These industries form the backbone of India’s labour market, employing crores of workers in hubs across the country.
- Shrimp Exports: Worth USD 2.4 billion, facing 60% tariff, endangering aquaculture hubs in Visakhapatnam.
- Gems & Jewellery: USD 10 billion in exports, to be taxed at 52.1%, threatening lakhs of jobs in Surat and Mumbai.
- Textiles & Apparel: USD 10.8 billion at risk, with 63.9% duties, putting pressure on Tirupur, Bengaluru, and NCR hubs.
- Carpets & Handicrafts: Nearly USD 3 billion combined, set to face near-collapse with rivals like Turkey and Vietnam poised to benefit.
- Agrifood: USD 6 billion in exports, including basmati rice, spices, and tea, to face 50% tariffs, giving Pakistan and Thailand a competitive edge.
- Metals & Chemicals: Steel, aluminium, copper, and organic chemicals worth USD 7.4 billion also face tariffs above 50%.
Pockets of Relief
While 66% of India’s U.S.-bound exports are hit, around 30% (USD 27.6 billion) will remain duty-free. Pharmaceuticals, APIs, and electronics dominate this segment, with medicines alone accounting for 56% of exempted shipments.
Mitigation Strategies Suggested
The GTRI report proposes several measures to cushion the blow:
- Financial Support: Rs 15,000 crore interest equalisation scheme, targeted credit lines, and wage support for MSME-heavy hubs.
- Tax Reforms & Refund Schemes: Strengthening RoDTEP and RoSCTL to reduce costs for exporters.
- Market Diversification: Aggressive trade missions to EU, Gulf, and East Asia.
- India+1 Hubs: Setting up production and export bases in UAE, Mexico, and Africa to bypass U.S. tariffs.
Conclusion
The steep U.S. tariffs are set to trigger an export crisis in India’s labour-intensive sectors, jeopardising millions of jobs and market share. While pharmaceuticals and electronics offer partial relief, urgent policy measures and diversification strategies are essential to cushion the impact and secure India’s export future.