India’s effective tariff burden rises sharply, over double that of Vietnam and Philippines

India's effective tariff double that of Philippines and Vietnam

India’s effective tariff rate, after exclusions and exemptions, has surged to 29.1 percent following the United States’ decision to impose an additional 25 percent duty on Indian imports. The move, announced by President Donald Trump on August 6, is being positioned as a punitive measure for India’s growing economic ties with Russia. With this, the total US-imposed tariff on Indian goods now stands at 50 percent—placing India at the top of the tariff chart among key Asian economies.

This sharp increase significantly widens India’s tariff disadvantage compared to its export-driven peers in the region. According to data analysed by Moneycontrol, the effective tariff rate now applied to Indian goods is nearly triple that faced by the Philippines and Vietnam, which attract duties of 10.2 percent and 12 percent, respectively. Bangladesh’s effective tariff rate stands at 19.9 percent, Pakistan’s at 18.1 percent, and Indonesia’s at 15.6 percent.

These figures do not include sectors like steel, aluminium, semiconductors, copper, and automobiles, which attract separate levies and have been excluded from the latest tariff hikes. Yet, even with these exemptions, India’s overall trade exposure to tariffs has risen substantially.

In 2023, the United States’ Most Favoured Nation (MFN) tariff rate on Indian goods—excluding the exempted categories—stood at just 2.1 percent. This was significantly lower than MFN rates faced by Bangladesh (10.8 percent), Pakistan (8.5 percent), and Vietnam (3.2 percent).

When combined with the new additional duties, India’s total effective tariff rate now stands at 31.1 percent. This is marginally higher than Bangladesh’s 30.7 percent and well above Pakistan (26.7 percent), Sri Lanka (27 percent), and Indonesia (19.9 percent). Thailand and the Philippines continue to maintain far lower total tariff burdens at 10.7 percent and 12 percent, respectively.

India’s new placement at the high end of the tariff spectrum threatens to erode its competitiveness in the critical US market, especially in labour-intensive sectors that operate on thin margins.

A recent Moneycontrol analysis found that nearly $63 billion worth of Indian exports to the US may now be exposed to intensified competition from regional rivals. Among the sectors most vulnerable to this realignment are textiles, garments, gems and jewellery, and organic chemicals.