India’s Exports to U.S. Slide 28.5% in Five Months as Tariffs Hit Labour-Intensive Sectors Hardest

By R. Suryamurthy

India’s outbound shipments to the United States have slumped sharply over the past five months as steep tariff hikes imposed by Washington rippled through nearly every major export category, from smartphones and textiles to seafood and chemicals.

A new assessment by the Global Trade Research Initiative (GTRI) shows total exports to the U.S. falling 28.5% between May and October 2025—from USD 8.83 billion to USD 6.31 billion—marking one of the steepest short-term declines in recent years for India’s largest overseas market.

The contraction followed a rapid escalation in U.S. import duties: tariffs that were 10% in early April jumped to 25% in August and reached 50% by the end of that month. The sudden rise left Indian exporters facing some of the harshest levy rates globally; by comparison, China faced tariffs of roughly 30% and Japan about 15%.

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The GTRI analysis divides India’s U.S.-bound shipments into three buckets based on tariff exposure, but the outcome across all categories was uniformly negative. Even tariff-exempt goods—which account for 40% of India’s exports to the U.S.—registered declines, underscoring the broader strain in trade relations, logistical disruptions and softer American demand.

Tariff-Exempt Goods: Smartphones Lead Declines

Smartphones, pharmaceuticals and petroleum products—items not covered by the new duties—suffered an unexpected 25.8% drop over five months. Smartphone exports, India’s single largest product line to the United States, slid 36%, down from USD 2.29 billion in May to USD 1.50 billion in October. After peaking in June, monthly shipments fell steadily through August and September, before clawing back to USD 1.5 billion in October.

Pharmaceutical exports held up relatively well, dipping just 1.6% from USD 745.6 million to USD 733.6 million. But petroleum products fell 15.5% to USD 246 million, with motor gasoline exports plunging from USD 68.3 million to zero as demand patterns shifted and shipping routes were rejigged.

Uniform Tariffs, Uneven Outcomes

Sectors such as iron and steel, aluminium, copper and auto parts—where all global suppliers face the same tariff rate—also posted declines, though the contraction appears linked more to a cooling U.S. industrial cycle than to a loss of competitiveness.

Aluminium exports dropped 43.3% to USD 58.2 million, while iron and steel slipped nearly 20% to USD 211 million. Auto parts shipments fell 22% to USD 142.5 million, and copper declined 13.5% to USD 27.5 million. These sectors together comprised just 7.6% of India’s exports to the U.S. in October, but the declines highlight an underlying slowdown in American manufacturing activity that predates the tariff shocks.

Labour-Intensive Sectors Bear the Brunt

The steepest damage was concentrated in labour-intensive categories—goods that face the full 50% U.S. tariff and accounted for over half of India’s shipments in October. Exports here collapsed 31.2%, wiping out nearly USD 1.5 billion in trade within five months. For many industries, the tariff swing has been swift enough to trigger production cuts and job losses.

Textiles and apparel, long a backbone of India’s labour-intensive export base, suffered a 32% contraction. Garments alone plunged more than 40%, with orders shifting rapidly to Bangladesh, Vietnam and Mexico. Clusters in Tiruppur, Noida, Panipat and Ludhiana are reporting order cancellations and worker retrenchment.

Solar-panel exports dropped a startling 76%, reflecting a sudden loss of market share to China and Vietnam—countries facing less than half the tariff rate. With the U.S. market driving scale in solar manufacturing, the collapse has raised concerns that India could lose ground just as global demand for clean-energy hardware accelerates.

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Gems and jewellery shipments fell 27%, with cut and polished diamonds down 29% and gold jewellery down 16%. Only lab-grown jewellery bucked the trend, rising 21%, though exports of raw lab-grown diamonds collapsed nearly 80%, signalling volatility in that emerging segment.

Chemical exports slid 38%, a decline that has hit manufacturing clusters in Vapi, Dahej, Ankleshwar and Visakhapatnam. Agro-chemicals fell more than 40%, and essential oils nearly 27%, revealing pressure across both industrial and consumer-facing segments.

Marine exports sank 39%, driven largely by a 40% drop in vannamei shrimp shipments. Buyers have begun shifting steadily to Ecuador and Vietnam, draining employment from seafood-processing hubs stretching from Nellore and Bhimavaram on the east coast to Veraval and Porbandar on the west.

Agricultural Shipments Unravel

Agriculture and food products saw some of the steepest falls—down 45% overall. Cocoa exports were virtually wiped out, slipping from USD 16.7 million in May to just USD 0.1 million in October. Dairy and honey shipments fell 72%, oilseeds more than 55% and coffee, tea and spices almost 37%.

Lac, gums and resins—important for niche export clusters in Jharkhand and parts of central India—dropped 65%. Across Nashik, Gujarat, Kerala and Karnataka, exporters are reporting unsold inventory and cancelled consignments, with price pressures intensifying as domestic markets struggle to absorb the surplus.

Policy Fixes and Diplomatic Moves

GTRI has urged the government to move quickly on two fronts: reviving long-pending export-support schemes and securing a rollback of the additional 25% U.S. tariff linked to India’s purchases of Russian oil.

The Export Promotion Mission, announced in March and cleared by the Cabinet on November 12, has yet to take operational shape. Schemes such as the Market Access Initiative and the Interest Equalisation Scheme—mainstays for exporters—have not made any disbursals this fiscal year. With annual funding capped below ₹4,200 crore, GTRI warns that the Mission risks falling short unless guidelines are issued swiftly and payments normalised.

On the diplomatic front, the think tank has asked New Delhi to press Washington to withdraw the Russia-linked duty before India commits to any broader trade negotiations.

President Trump has indicated that India has “very substantially” reduced its purchases from sanctioned Russian entities—removing the original justification for the extra levy. Rolling it back would effectively halve the tariff burden on Indian goods, bringing it to 25% and offering immediate relief to labour-heavy sectors.

Trade experts say that without some corrective action, the current tariff regime could harden into a structural disadvantage for India even as competitors consolidate gains. The past five months, they argue, demonstrate how quickly market share can shift when tariffs enter a punitive range and how difficult it can be to claw back lost ground. 

[5WH/VS]

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